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106-ICT Mentorship Core Content - Month 10 - Stock Trading - Using Options

Last modified by Drunk Monkey on 2022-10-26 08:54
1 00:00:13,230 --> 00:00:28,830 ICT: Okay, folks, welcome back in June 2017, iced tea mentorship, stock trading lesson for valuation stock selections. gay folks mentioned this many times in my
2 00:00:29,280 --> 00:00:39,810 free teachings, as one resource, I think as an investor, you should have this, you should have this as part of your repertoire. You need to have it as a
3 00:00:39,810 --> 00:00:51,120 resource as a tool. I think it's valuable. I don't have high enough things to say about Investor's Business Daily, I've used it as a resource since the late
4 00:00:51,120 --> 00:01:03,600 90s. It's an awesome, awesome tool, it gives you in my opinion, the best fundamental slant on stocks than there than you could find anywhere else. I used
5 00:01:03,600 --> 00:01:19,500 to subscribe to The Wall Street Journal. As a young trader, I felt stilted, a little stuffy, I guess the word I was looking for. And it just felt not friendly
6 00:01:19,530 --> 00:01:29,850 to me as a as a new trader, Investor's Business Daily has always been presented in a manner where it's easy to understand. It's very organized. I like what they
7 00:01:29,850 --> 00:01:38,610 do. I've always liked what they've done with their resource. And they've always been on the cutting edge as far as trying to crack the code in terms of real
8 00:01:38,610 --> 00:01:49,950 supply and demand factors behind stocks. So if there's a means of valuation, from a fundamental standpoint, I believe that there are fundamental reasons to
9 00:01:49,950 --> 00:02:02,340 buy stocks doesn't mean that those fundamentals are sound, or that they're going to equate to future profitability for the company. But if we're going to number
10 00:02:02,340 --> 00:02:11,250 crunch, I think Investor's Business Daily is the number one resource in that regard. So everything I'm going to talk about here is going to be highly
11 00:02:11,280 --> 00:02:23,760 dependent upon you knowing or getting familiar with Investor's Business Daily newspaper, they have it in digital form. Now, you can do a four week free trial.
12 00:02:24,960 --> 00:02:40,110 They do ask for credit card. But if you cancel before, they won't charge it. But the point is, if you wait until like the second week of September, wait and then
13 00:02:40,170 --> 00:02:51,150 ask for a four week trial subscription. Okay, so the second one in September, I'm gonna remind you all to subscribe to Investor's Business Daily, with a free
14 00:02:51,210 --> 00:03:03,330 four week trial. And no, not in business with them. No, not a salesman for them, I genuinely use their service. And I like it. So part of this mentor ship was to
15 00:03:03,330 --> 00:03:16,140 learn what it is I use to come away with my analysis concepts. And this is one of them. So and I use it for currency stuff, too. I use it for commodity stuff,
16 00:03:16,380 --> 00:03:26,730 as well. But when we get into post mentorship stuff, in September, October, whenever the divergence occurs in the stock market that we're usually looking
17 00:03:26,730 --> 00:03:34,950 for, for the seasonal low. We'll be tracking that week by week. And when it comes to fruition, I'll actually throw in a bonus teaching because I promised
18 00:03:34,950 --> 00:03:44,430 you that I would do a stock market analysis over the shoulder. So you guys can see what how I do it. Breaking down the industry, group sectors, leadership, all
19 00:03:44,430 --> 00:03:56,100 that business, and using all the tools that I use for my price action study. But I say that because I'm going to go over and kind of like in general terms of
20 00:03:56,100 --> 00:04:07,260 what I use investors necessarily with. And, like 80% of this teaching is basically what you learn from reading William O'Neal's book, How to make money
21 00:04:07,260 --> 00:04:19,800 trading stocks. To me. I can't say enough to simply read that book. Okay. It's a really, really good book. It's timeless, because the information is still
22 00:04:19,800 --> 00:04:29,160 pertinent today. But without using the Investor's Business Daily newspaper, it's kind of like, well, you know, it's just neat information. It's thanks for
23 00:04:29,190 --> 00:04:38,520 including Michael, but I'm really not gonna go that direction. I believe you. If you don't trade stocks, you should be looking at this resource. You don't have
24 00:04:38,520 --> 00:04:49,680 to subscribe to it either. If you can get to a newsstand, where you live that locally, before I actually became a subscriber to their service, I used to go to
25 00:04:49,890 --> 00:05:01,200 the newsstand in one of the local malls where I lived at and I would go there on the weekends and get the week Weekend Edition which had like all all the bells
26 00:05:01,200 --> 00:05:09,930 and whistles and the complete stock breakdown, and all the indicators they use for their fundamental ratings.
27 00:05:11,309 --> 00:05:21,959 And I would literally pour over this newspaper for hours on Saturday, and I loved it absolutely loved it. And now, it's digital, which makes it very easy to
28 00:05:22,469 --> 00:05:32,429 flip through and find what you're looking for. But truth be told, I still get the weekly printed edition, because I like it. I'm a dinosaur, you don't have to
29 00:05:32,429 --> 00:05:46,229 go that route. But it does save money. If you want to look at it that way, I guess you can go there and buy the newspaper once or twice a month. And maybe
30 00:05:47,699 --> 00:05:56,489 that would be one way for you to save some money. Cuz you don't need to see it all the time. I think once a month is sufficient enough, especially if you're
31 00:05:56,489 --> 00:06:03,539 waiting for something that technically they'll line as we'll discuss here in this teaching. But I can't say it enough investors necessarily absolutely one of
32 00:06:03,539 --> 00:06:21,989 the best resources for a trader. So we've learned about index stocks, and the Dow 30, NASDAQ 100 and SP 500. So you have a universe of 630 stocks at your
33 00:06:21,989 --> 00:06:37,769 disposal as a index base, this teaching company talking about valuation selections on growth stocks. And this is where the big astronomical stock
34 00:06:37,799 --> 00:06:42,689 searches take place. Okay, it's going to be in this valuation format.
35 00:06:47,760 --> 00:07:00,810 And obviously, I can't claim ownership of this, but I do subscribe to the theory that William J. O'Neil created. And his acronym he uses for it is cancelin. And
36 00:07:00,810 --> 00:07:11,700 we'll break down each one of these components. And I'll tell you how I segue in from this information into how I use my my price action analysis concepts. But
37 00:07:11,700 --> 00:07:25,500 the first portion all the way up to the letter M, primarily this portion of the acronym. That's where I get my fundamental basis from. So when I view a stock on
38 00:07:25,500 --> 00:07:38,550 a fundamental level, whether being bullish or bearish, I'm using the method of breaking down the stock with these letters here that we'll look at closer. And
39 00:07:38,550 --> 00:07:53,640 finally, the last one here is the technical basis, which is my own input into it. I don't believe that William J on Neil's approach to timing the market was
40 00:07:53,670 --> 00:08:05,400 sufficient enough. And by my own analysis concepts, and by using my s&p trading and such, I, I adopted, obviously the cancelin method from the fundamental
41 00:08:05,400 --> 00:08:15,150 standpoint, but I can time the market, as we've seen in the market in the mentorship and prior to the mentorship, I can time the market pretty good in
42 00:08:15,150 --> 00:08:25,620 regards to whether they're bullish or bearish. And we know how to select certain times of the year to do that. So we have timing, and we have seasonals. And we
43 00:08:25,620 --> 00:08:40,890 have fundamentals together. Wow, do we have a dandy of a stock picking analysis concept. So fundamentally speaking, the first one in the acronym, CAN SLIM is C.
44 00:08:41,430 --> 00:08:52,800 And when Jamiel basically was referring to current earnings. And you'd be looking for stocks with earnings growth of at least 25% in the last reported
45 00:08:52,800 --> 00:09:03,480 quarter. And larger growth is even better. But you're gonna be also looking to see earnings accelerate over the last three quarters. And for example, one
46 00:09:03,480 --> 00:09:15,180 quarters earnings may be up 25% In the next quarter or 50% in the most recent of 90% so ideally you want to see the increase building not just a steady growth
47 00:09:15,210 --> 00:09:28,590 cedras enough, but you want to see it increasing. In the A in the acronym stands for annual earnings. And you want to see annual earnings growth of at least 25%
48 00:09:28,650 --> 00:09:38,340 each of the last three years. And you also find that the greatest stocks over time, have had the best margins in the industry group and return on equities, at
49 00:09:38,340 --> 00:09:47,880 least 17%. And there's so many things going to go right over your head and without actually doing it with real stock selections and going through the
50 00:09:47,880 --> 00:09:58,410 process, which you'll actually see me do in the fall. So just noted the folks that are here at the end of this mentorships content delivery during those three
51 00:09:58,410 --> 00:10:07,500 months. You we'll actually see me do this spend on how long it's going to take me, it's probably gonna be a long video, or Long live session, but it'll, it'll
52 00:10:07,500 --> 00:10:14,250 be done on a Saturday. And you'll see exactly how I do it. But I'll break down all the things that's shown here. And I'll show you how you can get this
53 00:10:14,250 --> 00:10:22,950 information. Apart from Investor's Business Daily for some of it, but other things, you're going to have to rely solely on Investor's Business Daily, like
54 00:10:23,040 --> 00:10:30,480 annual earnings and quarterly earnings and stuff. That's kind of like common knowledge stuff, you can pull that up on a simple thing, bar chart or market
55 00:10:30,480 --> 00:10:44,550 watch something like that, you can pull that information out really relatively easy. Okay, the end and the acronym stands for the new factor. And the biggest
56 00:10:44,760 --> 00:10:56,460 canceling winners or stocks that are found to be selected by this method. They always had something new, okay. And it could be a new product, it could be a new
57 00:10:56,460 --> 00:11:07,080 service, new leadership, new management, new price high or new condition in the industry. And an important factor is to look for newer companies. So studies
58 00:11:07,080 --> 00:11:21,150 have shown the greatest stock winners showed that 70% of them went public within the last eight years. So this new economy, this new growth, that scene wide way
59 00:11:21,150 --> 00:11:31,800 of like for instance, like social media, okay, Facebook, for example, the company came out with an IPO. And I remember telling some of my friends that you
60 00:11:31,800 --> 00:11:37,770 want to wait for it to trade down to around $20 a share, and buy it and wait for it to go over $100 A share within about three and a half years.
61 00:11:39,059 --> 00:11:48,449 Went to exactly the script. A lot of them bought it initially and ended up paying a little bit more in set theory, a little bit of a pullback on it. But it
62 00:11:48,449 --> 00:11:57,329 was a new company, it was a new IPO. But it was a fresh idea. And everybody wanted to be a part of it. And just at the time of this recording, now, it's hit
63 00:11:57,329 --> 00:12:08,069 a new mile marker with several billion users a month or on Facebook. Now I don't personally have a Facebook anymore, I did have one. But the point is, you want
64 00:12:08,069 --> 00:12:19,649 to be looking for new horizon opportunities. And while there may not be new companies coming on the scene in terms of publicly traded stocks, there may be a
65 00:12:19,649 --> 00:12:28,349 company that's coming out with a fresh idea or a new spin on something or revamping something. Okay, and I'm giving an example I like Apple, every time
66 00:12:28,349 --> 00:12:40,559 they do a new iPhone update. And I'm looking forward to the iPhone eight this fall. The that always obviously generates new, more interest in that particular
67 00:12:40,589 --> 00:12:53,999 stock or that company. So if we have a change in management, a lot of times that will spur on a new interest in buying. So always look for things new. And this
68 00:12:54,929 --> 00:13:06,599 this portion of cancelin is best used for once you identify a stock that has strong current or earnings annual earnings, you want to start looking in like a
69 00:13:06,599 --> 00:13:15,419 simple Google search. The company lists that you build a stock watchlist have to have strong earnings quarterly and annually. The next thing you want to start
70 00:13:15,419 --> 00:13:24,689 looking through is the Google search on new stocks, see if there's anything new coming up, if there's any, any kind of new idea, a new spin on something,
71 00:13:24,839 --> 00:13:33,029 something that was going to draw investors attention to it, because if that's happening, it's also going to happen on an institutional level as well. And who
72 00:13:33,029 --> 00:13:43,019 has more money, Joe Schmo on the corner, that's John and shoes and put some money into an IRA or the folks that run these mutual funds or work for insurance
73 00:13:43,019 --> 00:13:54,239 companies, obviously the ladder. So anything new is going to be beneficial to you in terms of seeing potentially new purchasing more appreciation in the share
74 00:13:54,239 --> 00:14:06,389 price, coupled with strong current earnings and annual earnings. Okay, the letter S and the acronym standing for supply and demand and no, we're not
75 00:14:06,389 --> 00:14:16,679 talking about supply and demand as it relates to technicals. Right. So one of the most basic economic principles is the law of supply and demand, which is
76 00:14:16,709 --> 00:14:26,039 most sharply demonstrated in the stock market. Now, I'm going to argue with that. But we'll just go along with what they're saying here, the strong demand
77 00:14:26,039 --> 00:14:37,709 for unlimited supply of available shares will push a stock price up. On the flip side, an oversupply of shares and weak demand will cause the price to sag or
78 00:14:37,769 --> 00:14:50,309 decline. When we looking for a stock that obviously is well valued, it has to be above $20 A share my personal opinion has to be a share price of over 20 our
79 00:14:50,309 --> 00:14:59,369 share and it has to have a reasonable float that means the outstanding number of shares that can be purchased. And we'll we'll talk more about that when we
80 00:14:59,369 --> 00:15:14,039 actually do K A study in literally, I pick out the winners is going to be for this fall. But you want to be looking at the idea of buying a stock that has a
81 00:15:14,039 --> 00:15:27,149 ton of float or open shares that can be purchased. Calm compare that with another stock that has a lesser number of shares in float that can be purchased,
82 00:15:28,169 --> 00:15:36,029 that has the same type of conditions where it has strong earnings and annual earnings and it has something new a new product comes out maybe new management
83 00:15:37,229 --> 00:15:47,489 and it has far less shares. Which one has more opportunity to go higher? Well, if smart money starts buying that one with a lesser float or lesser of
84 00:15:47,489 --> 00:15:56,369 outstanding shares, that one's going to go up a lot more because it's going to be very easy for them to reprice because of the supply and demand factor seen by
85 00:15:56,399 --> 00:16:09,989 investors pouring money into it. Okay, the L and the acronym cancel M stands for leader and laggard. Alright to true leaders of those companies shown the best
86 00:16:10,019 --> 00:16:20,129 earnings growth, strongest sales and superior price performance and are in leading industry groups. Consider buying high and selling higher.
87 00:16:21,360 --> 00:16:30,180 That sounds like foolishness, but we've learned that basically that's a little less a low resistance liquidity run basically. Okay, we're already seeing price
88 00:16:30,180 --> 00:16:38,550 go higher. And we are comfortable with it because it's moved away from a discount array. And we know there's gonna be reaching for buyside liquidity.
89 00:16:39,570 --> 00:16:48,330 That's the general principle in the stock market, you're gonna be looking for these leadership issues, not a laggard relative strength analysis is going to
90 00:16:48,330 --> 00:16:58,200 help you with this. But we can be buying something that's already been moving up, and we're gonna be selling it at a higher price. Now that results of their
91 00:16:58,200 --> 00:17:06,780 studies over it, William J. O'Neill's company, Investor's Business Daily is the greatest market winners revealed something quite interesting that the strong got
92 00:17:06,780 --> 00:17:15,300 stronger. And that's the basis of how I use relative strength analysis because we're ferreting out the ones that are leadership. So smart money is pouring
93 00:17:15,300 --> 00:17:24,720 money into it. Chances are, it's going to go up, not go up a little bit, but go up a lot. So the task for you as the astute investor is to locate these strong
94 00:17:24,720 --> 00:17:28,950 leading companies and to avoid the weak six SR or laggard performers.
95 00:17:34,110 --> 00:17:41,760 Okay, the AI in acronym cancelin stands for institutional sponsorship, and you hear me talk about that a lot. Because it's important. There's ways we can track
96 00:17:41,760 --> 00:17:50,940 in forex, there's ways you can check in commodities. But the way that you can track it in stocks is the participation of the mutual funds. So mutual funds,
97 00:17:50,940 --> 00:17:59,610 pension funds, and banks are the big players that drive the market in stocks. And they account for as much as 80% of all trading activity. For stock to be a
98 00:17:59,610 --> 00:18:08,550 top form, it has to have institutional support to fuel its price moves, suggesting that you only buy stocks that have at least 10 mutual funds that own
99 00:18:08,550 --> 00:18:17,130 is ideal. And have two to three quarters of increasing institutional sponsorship. Now, there are ways that you can go through and dig out all this
100 00:18:17,130 --> 00:18:25,770 information. But I've found that it's much easier to go through the ranking system that IBD uses in their newspaper, and this is one of those resources that
101 00:18:26,010 --> 00:18:34,740 save a lot of time, you can just go right there in their their stock table and find all of the stocks that fit this criteria. And they also have a stock
102 00:18:34,740 --> 00:18:42,030 scanner too, for you guys that like to do these types of things you can put in the criteria you're looking for. And all the ratings and such, you know, spit
103 00:18:42,030 --> 00:18:50,880 out all the stocks that they follow that meet that criteria on a fundamental basis. And one of the institutional sponsorship tabs they have, in my opinion is
104 00:18:50,880 --> 00:19:00,510 awesome. And if you use it correctly, at the times of the year, when we look to be wire, or leading into it can find some real deities in terms of strong
105 00:19:00,510 --> 00:19:14,610 leadership upside. Companies. In lastly in our acronym cancelin. It's the market direction. And studies show that three out of four stocks follow the market
106 00:19:14,610 --> 00:19:24,000 trends. So you're going to want to be trading in sync with the market as I've always taught. And you should only be buying stocks in a confirmed uptrend and
107 00:19:24,000 --> 00:19:35,310 you look to protect your capital in corrections. So market direction. I don't subscribe to anyone else's theory about that. I think the only thing that
108 00:19:35,310 --> 00:19:47,730 matters for stocks, in terms of things it's been around forever is Dow Theory. Dow Theory is all you'll ever need in terms of technical analysis for stocks. To
109 00:19:47,730 --> 00:19:59,970 me that coupled with how I look at institutional sponsorship and institutional order flow, and premium and discount arrays. Simple simple, simple stuff up
110 00:20:00,000 --> 00:20:10,380 flied with Dow Theory as a confirmation, looking at quarterly shifts and seasonal tendencies, that's how we time the market. No one breaks down timing to
111 00:20:10,380 --> 00:20:20,460 stock market down like I do. And that sounds rather arrogant right now, but it's the truth. You've gone through most of the mentorship here. already by the time
112 00:20:20,460 --> 00:20:30,300 of this recording, you're listening to it. You can see there's rather unique things that I do about price and it's highly specific. It's a it's about
113 00:20:30,300 --> 00:20:42,900 specific times of the day and specific times of the week, days of the week that are superior than others. There's periods of the year or calendar months that
114 00:20:42,900 --> 00:20:53,190 are better than others and there's certain quarters of the year that are better than others in terms of bullishness, or bearishness. So, I have spent a lot of
115 00:20:53,190 --> 00:21:04,350 time classifying how I can, in general terms, view the market in a cyclical nature where it repeats itself very generically. And no one else has done that
116 00:21:04,470 --> 00:21:14,760 they get they get close to it with a little bit of this, a little bit of that. But I came up through just about everything that was around prior to year 2000.
117 00:21:15,240 --> 00:21:25,710 And I was in everything, you know, I did Elliot, we went did all those things that supposedly work. And I come away with most of it's nonsense, and some of it
118 00:21:25,710 --> 00:21:37,110 works sometimes. And that's why we keep selling books and stuff. But we the way I interpret price, if we can look at things seasonally. For instance, if we know
119 00:21:37,110 --> 00:21:45,870 there's a seasonal influence for stocks to rally a specific time of the year, doesn't it make sense to start studying the market right before that maybe a
120 00:21:45,870 --> 00:21:55,500 month before that seasonal impact, and start looking for companies that are already showing evidences that they're having strong earnings. And your earnings
121 00:21:55,500 --> 00:22:04,530 are increasing. They have a new product, new management, something new about them something drawing attention, and they have a reasonable open float for
122 00:22:04,560 --> 00:22:13,290 shares that are existing that would need can be purchased. And that way we can start tracking whether or not mutual funds are pouring into it. And if it's a
123 00:22:13,290 --> 00:22:22,260 leadership stock, and its industry group and sector, man, you got everything going for you. The only thing you need to know is when's the stock market gonna
124 00:22:22,260 --> 00:22:33,600 move as a whole. I've already taught you that. So by coupling that you actually put IBD Investor's Business dailies statistics on steroids.
125 00:22:38,460 --> 00:22:49,440 It takes us back to the major market timing points. Every one of the month here gives us our bias for bullishness or bearishness, you as a trader for looking in
126 00:22:50,730 --> 00:23:02,340 buying and selling stocks. You want to be buying in the first portion of the year, February to May, and in selling stocks are looking to sell short stocks
127 00:23:02,670 --> 00:23:14,040 from May going into the latter half of September. And then in October, going into the last day of the trading year, you want to be looking to be a buyer of
128 00:23:14,040 --> 00:23:26,250 stocks. So you have this basic rule of buying stocks February to May, selling stocks may to mid September. And then from mid September to the end of the year,
129 00:23:26,490 --> 00:23:35,850 you look to be buying stocks. That's all there is to this, folks. It's very simple. Everyone creates all these things these wave one and wave two and
130 00:23:35,850 --> 00:23:47,310 correction being correction. See all that stuff nonsense. It's ridiculous. You just simply look at where is the seasonal tendencies for these large deep pocket
131 00:23:47,340 --> 00:23:57,240 investors. But we call new smart money. When the smart money is looking to operate, whether a buyer seller, that's all we're trying to do. We understand
132 00:23:57,240 --> 00:24:07,050 seasonal influences are repeating. They happen every year. And if we know when the stock market's predisposed to go higher, we can go in and fundamentally
133 00:24:07,050 --> 00:24:16,620 filter out stocks that are already showing leadership stocks that are failing to make lower lows and times when we looking to be a buyer of stocks. By default,
134 00:24:16,650 --> 00:24:26,400 you are going to see leadership issues. And if you have Investor's Business Daily as a resource, you can use that column they have and in part of their
135 00:24:26,400 --> 00:24:36,570 smart ratings, the institutional sponsorship rating and you'll actually see me do it this fall actually go through the whole process. We'll be sorting through
136 00:24:36,570 --> 00:24:45,120 like 7500 stocks. It's crazy. I know but you'll see it doesn't take much work at all really, really easy. And I won't use the stock screener that's available
137 00:24:45,240 --> 00:24:53,400 like I have all that stuff is bells and whistles. But I want to show you how I do it. Literally going through all the stock tables. It's fun, I'm looking
138 00:24:53,400 --> 00:25:03,150 forward I love doing it in the fall. It's one of those things I like doing as a as a pastime because I used to do it years go with, you know high interest in
139 00:25:03,150 --> 00:25:15,690 being participating in it. And in great deal. But now because I'm basically a one trick pony with Forex, I've moved away from it. So I get to the wonderful
140 00:25:15,690 --> 00:25:25,050 privilege to be able to do it in front of all of you. Whereas I generally don't do in front anybody but just go sit in the analysis, make my my watch list and
141 00:25:25,050 --> 00:25:34,110 and finally, whittle it down to what I believe is going to be a strong leadership stock in our watch it go into the end of the year, going into the
142 00:25:34,110 --> 00:25:50,580 first month or two in the next year. At a time of that fall analysis, when we do that together, I'm actually gonna go through the darlings of the Dow, I'm gonna
143 00:25:50,580 --> 00:25:58,290 do that one with you. It's all the same. That same Saturday, I'm going to do the darlings of the Dow, the dogs of the Dow, which is another stock selection
144 00:25:58,560 --> 00:26:11,160 concept in which you can do a Google search and figure out what that is. And I'm also going to do the index stocks for the s&p, the Dow and the Nasdaq. So you'll
145 00:26:11,160 --> 00:26:22,440 know all the strongest index stocks. And I'm going to go through all of the Investor's Business Daily, fundamentally ranked stocks, and then I'll find the
146 00:26:22,440 --> 00:26:33,120 ones that have the best technicals. As I look at timing the market looking for index SMT against. Now, that's one of the things I've learned over the years
147 00:26:33,120 --> 00:26:45,570 looking at some of their stocks, they have a relative strength rating in their IBD smart tabs. And that to me, I thought they were looking at how I look at
148 00:26:45,570 --> 00:26:55,410 price, you failing to make lower lows, and then that's the buy. That's not, that's not what they're doing. But you're going to see sometimes IBD will give
149 00:26:55,410 --> 00:27:06,930 you strong fundamental ratings on certain stocks, but they won't have the technical support it. So what we're forcing ourselves to do is fine, yes, there
150 00:27:06,930 --> 00:27:16,950 is a fundamental basis for this stock to do well, because it's making money, but the stock may not have enough attention drawn to it. So therefore, you won't see
151 00:27:16,950 --> 00:27:25,980 these investors pouring in on an institutional level. Because there's nothing that draws attention to it, no new thing happened. Remember the end and
152 00:27:25,980 --> 00:27:35,070 canceling. So there's so many stocks out there to be following. It's like a first listen to monocle the first time he talked to me about how he wants to be
153 00:27:35,070 --> 00:27:39,150 a stockbroker, he didn't want to how to the stock market works. And then he's gonna start trading and yada, yada, yada.
154 00:27:40,980 --> 00:27:47,910 When he found out how many stocks are really out there, and the whole business of being a stockbroker was just basically selling something like a used car
155 00:27:47,910 --> 00:27:57,690 salesman, there was no valuation, there was no analysis, they were just told this is what we're pitching. Well, that's not what people want. They want, they
156 00:27:57,690 --> 00:28:05,850 want to know what stocks are most likely going to go up. And without large institutions pouring money into them, they're not going to go up, not to any
157 00:28:05,850 --> 00:28:14,340 measure. And investors on institutional basis are not going to put large funds into something that aren't making money. So you have to have quarterly earnings
158 00:28:14,340 --> 00:28:23,100 increasing, you have to have the annual numbers increasing something new, something fresh, something exciting about that company. It's got to be a
159 00:28:23,100 --> 00:28:34,920 leadership and its sector and its industry group. It's got to be a short supply in terms of number of shares outstanding compared to like, for instance, index
160 00:28:34,920 --> 00:28:43,920 stocks. You know, when I taught you how to do index stocks, there's a reason for that, because some of you are older and not privileged to be as young as some of
161 00:28:43,920 --> 00:28:53,460 you are now learning this stuff. So when you trade stocks, the index stocks are far less volatile, that liquidity is awesome. And it's not going to see these
162 00:28:53,460 --> 00:29:05,340 crazy whipsaw movements, they won't go up $5 And then crash 20 hours in next. growth stocks like I'm teaching you here. They can have very, very explosive
163 00:29:05,340 --> 00:29:17,460 growth on the upside. But they can also come down pretty quick, too. So in a way Investor's Business Daily is a great front running tool, where they it's like a
164 00:29:17,460 --> 00:29:29,460 pump and dump thing. But you're not in there. Investing in holding for 20 years. That's not what we do. We look for runs to new highs. And when it appreciates to
165 00:29:29,460 --> 00:29:39,090 a measure that's reasonable, which we'll actually go over. When I do the stock selections. I'll actually take what my targets are on each one individually. And
166 00:29:39,690 --> 00:29:50,100 William J. O'Neill talks about risking up to 8% for each stock. Well, that's nonsense. You don't need to do that either. So you'll learn all the money
167 00:29:50,100 --> 00:30:01,230 management rules, or actually by me actually doing it over my shoulder, but the stock selection process for valuation on high growth stocks is basically the
168 00:30:01,230 --> 00:30:10,950 Investor's Business dailies canceling method. But me blending in my technical analysis of institutional order flow market structure. And now as you've learned
169 00:30:11,040 --> 00:30:20,610 premium and discount array, modeling that in and using the divergence between the three averages, when that occurs, the Blue Ribbon results. So one of the
170 00:30:21,120 --> 00:30:30,960 things to look forward to when we get done this complete mentorship is we'll sit down in the fall, when it's actually time to be buying stocks. And I'll go
171 00:30:30,960 --> 00:30:39,240 through the whole process with you. And I'll tell you why I'm doing, why it's important why you shouldn't be doing this and that. And then you actually see me
172 00:30:39,240 --> 00:30:51,750 do the pricing for the options that we'll do. The fifth lesson on this week's content is having us stock options and pick it, it's one thing to talk about it,
173 00:30:51,870 --> 00:30:59,310 but actually they go through and pick them and then you can start tracking how they appreciate. Some of them aren't going to do as well as the others. But
174 00:30:59,310 --> 00:31:12,420 you'll see how amazing, you can get really crazy returns. And if you double, triple, quadruple your money, okay, with a call option, that costs you very
175 00:31:12,420 --> 00:31:24,510 little money. Who cares if the stock price only goes up $8 or $10? Who cares? If you're seeing that much of a return. That's what you're looking for. You're
176 00:31:24,510 --> 00:31:33,630 looking for velocity, you're not looking for this stocks going up 20 hours or $100 a share. Because chances are we're not going to hold those stocks that
177 00:31:33,630 --> 00:31:42,990 long. Again, I don't believe in the buy and hold mentality, I believe in to buy, hold it for something for a premium, let everybody else like it, fall in love
178 00:31:42,990 --> 00:31:50,550 with it want to buy it from us, and we'll sell it to them. You know, there's gonna be a lot of stocks that if you look back over time, there's many of them
179 00:31:50,550 --> 00:32:03,540 that went crazy with hire, like Amazon is one of them. In particular, I told everybody that last year, we'd see $700 A share. And I said ultimately, it'll go
180 00:32:03,540 --> 00:32:13,260 up to $1,000 a share, had a nice, wicked reversal, went down like $200 a share. And then from that point on, it rallied all the way up. And in this year, we've
181 00:32:13,260 --> 00:32:14,430 hit $1,000 a share.
182 00:32:16,170 --> 00:32:28,170 There's going to be instances where you see you potentially would have had a really long term hold. But well, who's making money here, the traders that buy
183 00:32:28,170 --> 00:32:37,710 and hold and keep their money tied up and they have to wait and see if these stale markets push the stocks up higher. Or the individuals that take the money,
184 00:32:37,980 --> 00:32:46,950 they invest in it, they swing, trade the stocks, take the money out and profit and reinvest those new profits into another move. Obviously, the second person
185 00:32:46,950 --> 00:32:55,950 that's doing that is making far more than the investor. So you need velocity. And you need to see something that's consistently done every single year the
186 00:32:55,950 --> 00:33:04,530 same way. And this is what I've mapped out for you. I've given you the seasonal tendency, the buy and sell programs that's seen across the entire 12 month
187 00:33:04,530 --> 00:33:14,580 calendar for the stock market. We know what we're looking for in terms of the divergence between the three averages. We know what months specifically are
188 00:33:14,580 --> 00:33:24,120 outlined for bullishness and bearishness. And if you only want to be a buyer of stocks, which is nothing wrong with that you want to focus on buying in February
189 00:33:24,120 --> 00:33:35,040 to May, and from the last half of September in the beginning of October all the way to the last portion of the year. That's it. So that's why you have to be for
190 00:33:35,040 --> 00:33:44,160 a stock trader, that's all you do. There's no getting in your day trading stocks, it's nonsense. It's foolishness. You want to be in air capturing swing
191 00:33:44,160 --> 00:33:56,160 trades, and stocks. That's it. You don't need doing anything other than that, to do anything less than that you're gambling. And think about, well, who makes
192 00:33:56,160 --> 00:34:10,320 these markets move, the stock price has to move by institutional sponsorship, the moves are going to be long and drawn out. So these mutual funds and large
193 00:34:10,830 --> 00:34:19,290 pension funds and insurance companies that pour money into these companies, they're not going to just buy one time, they're going to keep flooding that
194 00:34:19,290 --> 00:34:28,320 stock and keep buying and buying and buying it and keep on investing more money. Every one of their investors, funds are going to be poured into this. And just
195 00:34:28,320 --> 00:34:39,240 like in forex, the smart money to big money can't take on their position on the first time at that price. They gotta keep building it in. And if the stock is
196 00:34:39,240 --> 00:34:48,780 going to be a mover and go higher, they will have to buy at higher prices. And that's going to just propel the price of that share even more. So hopefully you
197 00:34:48,780 --> 00:34:59,190 found this insightful. The real lesson we'll be using this information as I describe it here over live market conditions this fall, where we actually wait
198 00:34:59,190 --> 00:35:09,180 for it The September to November time period where we wait for the divergence in three major market averages. When they diverge mostly in the market straight
199 00:35:09,210 --> 00:35:20,760 down into a discount, then we can apply all these concepts. I'll actually have an Investor's Business Daily, at the time, whatever that week would be the most
200 00:35:20,760 --> 00:35:30,480 present. And accurate current addition of IBD will be used so you can see how it's done. And you'll see it's a little bit of work, but it's fun. It's really,
201 00:35:30,480 --> 00:35:39,750 really fun. And it's nothing better to sit back and watch all these companies that you've hand picked. And it just totally destroys all of these fund managers
202 00:35:39,750 --> 00:35:50,070 out there that oh, yeah, I mean 18% I mean 25% of the Year, and you're gonna see how some of these stocks just blow that out of the water. And we'll have a
203 00:35:50,070 --> 00:35:57,960 sampling of index and growth stocks to choose from. Until next lesson, I wish you good luck and good trading