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110-ICT Mentorship Core Content - Month 11 - Stock Mega-Trades

Last modified by Drunk Monkey on 2022-10-26 08:54
1 00:00:00,000 --> 00:00:17,610 ICT: Hey folks, welcome back to July 2017. It mentorship ICT mega trades for stocks. This is lesson three.
2 00:00:22,320 --> 00:00:31,980 Okay, before we get into it, just as a reminder, when we're looking for mega trades, these are trades that are significant in magnitude. They're not little
3 00:00:31,980 --> 00:00:42,780 day trades, not short term trades, they're much more prolonged in their duration. And usually they can go about six to nine months or more in the stock
4 00:00:42,780 --> 00:00:53,130 market. But as it relates to stocks, we're going to make a small segue from, as I define quarterly shifts in the forex market and currencies, the quarterly
5 00:00:53,130 --> 00:01:02,850 shifts that occur in stocks are closely correlated to earnings. So the impact of quarterly cycles and earnings in the markets, we can't ever overstate them as it
6 00:01:02,850 --> 00:01:12,330 relates to the stock market, because obviously, every company out there that trades publicly, their business is obviously intended, you know, aiming at being
7 00:01:12,330 --> 00:01:20,280 profitable. No one starts a business with the intent of losing money. So all of the stocks that are publicly traded that we can invest in other traders around
8 00:01:20,280 --> 00:01:32,520 the world can invest in their goal is to make money, not so much for their investors, but for themselves. So greed is the number one driver for these
9 00:01:32,520 --> 00:01:43,380 companies existence, making money. So their earnings that is reported on a quarterly basis will have a great impact. So every three months, we can be on
10 00:01:43,380 --> 00:01:55,260 earnings watch, and anticipate the next big movers based on their respective earnings. Now, overlapping of making trade conditions and coupling this with the
11 00:01:55,260 --> 00:02:00,630 effect of quarterly earnings is crucial to finding the next explosive market moves.
12 00:02:06,630 --> 00:02:16,320 Seasonal tendencies obviously, I've mentioned this throughout this mentorship. But when we are focusing on stocks, as you can see here, this is a generalized
13 00:02:16,950 --> 00:02:27,600 seasonal tendency for the stock market, it generally makes a low began the year trades up into spring goes into a consolidation time period, usually all the way
14 00:02:27,600 --> 00:02:36,540 into the fall, and then creates the best buying opportunity in my opinion, for stock investing around September October time period, it can be as late as
15 00:02:36,540 --> 00:02:46,800 November, sometimes, but the fall months, September, October, November, in that three month, quarterly shift, or earnings season, there could be an enormous
16 00:02:46,830 --> 00:03:02,310 rally that takes place for buying stocks. There are times in the year when, throughout the spring and fall months, the market will go higher. There not
17 00:03:02,310 --> 00:03:11,610 always going to lockstep to what the seasonal tendencies are shown here in this graph. But as I mentioned earlier in this mentorship, when we're looking at
18 00:03:11,610 --> 00:03:22,500 stocks, the best times are the first half of the year. And the best overall for the entire year is the latter portion of the fall months going into the end of
19 00:03:22,500 --> 00:03:36,210 the year. By coupling the quarterly earnings. And the seasonal tendency, as I mentioned here, if we look for March time period, the first quarter is
20 00:03:36,210 --> 00:03:47,550 expectation earnings expectation, those releases of earnings and the companies, when they make those public will generate a lot of movement in the price. Much
21 00:03:47,550 --> 00:03:59,490 in the same way the third quarter earnings for stocks, which are reported in around the fall time period as well. They will be a huge generator of that big
22 00:03:59,490 --> 00:04:11,160 end of the year rally. Now by blending these two times of the year with earnings, seasonal tendency and other facets will recover in this teaching that
23 00:04:11,160 --> 00:04:27,240 make up a megatrade you have a greater degree of odds stacked in your favor, whether you're going to be successful in selecting high flying stocks to meet
24 00:04:27,240 --> 00:04:34,860 your market direction, now every significant move in the stock market is going to have its momentum increased by the general market direction. In other words
25 00:04:34,860 --> 00:04:45,300 are the three general averages, the NASDAQ, the s&p and the Dow Industrials, are they moving up collectively, or are they moving lower collectively? Obviously
26 00:04:45,300 --> 00:04:54,540 stone stocks can rally higher without the assistance of major market direction, but typically the accelerate when the broad markets move higher. Obviously, it's
27 00:04:54,540 --> 00:05:05,460 been stated numerous times even when I was teaching on baby pips, one of the easiest and now All it is is if you're a fish in the stream, it's easier to swim
28 00:05:05,490 --> 00:05:13,770 with the current. You don't want to be a salmon, okay, salmon swim against the stream. And once you get to the top, the dead, okay, they don't, they don't have
29 00:05:13,770 --> 00:05:22,470 any existence beyond that they do the job. That's it? Well, as traders, we want to swim with the stream. Okay, we're gonna go with the current. And it's easier
30 00:05:22,470 --> 00:05:32,820 to find high flyers in the marketplace, when we understand the direction the marketplace. Now, the mega trades are really specifically aimed at looking for
31 00:05:32,820 --> 00:05:42,390 buys. Because the market is predisposed to go up. The stock market is a Ponzi scheme, it's meant to get people to buy into it. So therefore, they always have
32 00:05:42,390 --> 00:05:50,340 to continuously create these high flying opportunities. The wonderful thing is, is the institutions walk around barefoot, and we can see them and see their
33 00:05:50,340 --> 00:05:58,740 footprints wherever they go on, they're easy to see it. But problem is, is most traders are not disciplined enough to wait for those conditions or know what to
34 00:05:58,740 --> 00:06:08,040 look for. We're going to teach that in this teaching and in the August templates. But when we were looking for mega trades and stocks, it's going to
35 00:06:08,040 --> 00:06:20,010 depend on the support of your trade idea, seeing major market direction, whether it's qualified make a trade candidate or not. Generally, the stock market moving
36 00:06:20,040 --> 00:06:28,830 up as a whole, all three general averages moving up as a whole, that will support a strong buying opportunity for stocks. So while we understand that the
37 00:06:28,830 --> 00:06:37,890 strong stocks that exist out there, we'll move some times ahead of the general market. We want to be looking for conditions when the general market is poised
38 00:06:37,890 --> 00:06:47,610 to trade higher. And if it's poised to trade higher, and it's a seasonal tendency or quarterly earnings overlap. It is like one of those perfect storms
39 00:06:47,610 --> 00:06:54,960 where everything comes together. And then you have a really good chance. It's not a be all end all panacea but yet really good chance of seeing that stock
40 00:06:54,960 --> 00:06:56,700 appreciating in value.
41 00:07:00,120 --> 00:07:08,850 The fundamental screen. Now to some degree, there is a fundamental impact to stock prices and their respective movements. I beat on this topic a lot because
42 00:07:08,850 --> 00:07:18,090 I admittedly, I'm not smart enough to go through all of the fundamentals and digest that stuff. And I believe that there are folks out there that can spend a
43 00:07:18,090 --> 00:07:27,780 great deal of time doing it. And for whatever reason, you know, if they look at certain things on a fundamental scale, and come away with some analysis and
44 00:07:27,810 --> 00:07:39,390 makes them money, who am I? Who am I to say that that's not valuable? I just say, from my personal standpoint, over the last almost 24 years now, I've very
45 00:07:39,390 --> 00:07:50,100 rarely looked at fundamentals because of my limited capability. As a person, I don't have the aptitude personally, to go through all that stuff. So I've always
46 00:07:50,100 --> 00:07:59,550 looked for shortcuts to give me the directional bias based on the fundamentals by smarter folks to me, okay, and the wonderful resource that's available today
47 00:07:59,760 --> 00:08:10,620 is technology. We have in our smartphone, more information and insights available at our fingertips than the President of the United States had just 20
48 00:08:10,620 --> 00:08:25,290 years ago. It's phenomenal to know how much resources that we have we have a library have limitless capabilities in terms of understanding where the
49 00:08:25,290 --> 00:08:33,690 information is right now, and we can get it instantaneously. So by having a systematic approach to screening stocks, fundamentally, okay, it's gonna be
50 00:08:33,690 --> 00:08:43,470 advantageous to your bottom line. The problem is, is where do you go for these fundamental information, informations and insights. There's a lot of different
51 00:08:43,710 --> 00:08:53,280 books I've read over the years. And while most of them, I don't agree with them, or I felt that they were overcomplicating the process, it's really important
52 00:08:53,280 --> 00:09:04,290 that we keep it you doable, okay, don't inundate ourselves with so many tasks that we really won't come to the conclusion of having a selection made, because
53 00:09:04,290 --> 00:09:14,850 there's a lot of different ways of doing fundamental scans. You looking at earnings per share, you're looking at quarterly numbers, annual numbers, which I
54 00:09:14,850 --> 00:09:24,000 do think those last two are, are important, because it's part of the cancelin approach that William J. O'Neill uses and used to run his company Investor's
55 00:09:24,000 --> 00:09:33,420 Business Daily, which I wholeheartedly stand behind, not because I get anything for it, but I am a customer. So I've used it for years. I've always referred to
56 00:09:33,420 --> 00:09:46,050 it and whenever I talk about stocks, I think it's one of the best front running instruments out there. And it does have merit to follow their breakdown over the
57 00:09:46,170 --> 00:09:57,780 sector in industry groups, because they do all that number crunching for you. Now, there are folks out there that you can go on YouTube and find various ways
58 00:09:57,780 --> 00:10:07,290 where they go through individual sectors and they go through individual industry groups. And yes, you can do all you can do all that work, okay, and make you
59 00:10:07,380 --> 00:10:16,920 feel like you're a scientist or PhD level analyst to me, I tried to do all that stuff in the beginning. And it just frustrated me. So I've always looked for
60 00:10:16,920 --> 00:10:26,910 some ways to make it easier, okay for me to come to a decision. Because if I have no problem or barrier to coming to a conclusion about whether I want to be
61 00:10:26,910 --> 00:10:34,440 a buyer or seller, once I know what I want to do, okay, I want to be a buyer, okay, then what do I want to be buying, I have to have a very simple approach to
62 00:10:34,620 --> 00:10:43,260 determining what it is I want to buy. Because once I knew what that is, I will have no problem or fear going in and buying it. Now, I may not know exactly when
63 00:10:43,260 --> 00:10:52,680 to get out, it may go way farther than I want to, you know, hold on to it for. But I don't care about that, you know, as long as I'm consistently doing the
64 00:10:52,680 --> 00:11:05,160 right thing, the numbers will take care of themselves. The screening process, though, it's best if you keep it short and simple to avoid wasted time and
65 00:11:05,160 --> 00:11:14,070 energy, and use today's institutional tools. Because there are tools out there that are relatively inexpensive, yes, you're had to spend some money sometimes.
66 00:11:14,340 --> 00:11:21,450 But if you're going to be an investor, you're gonna be a trader, and you want to be doing it on your own, what's better, you spending a little bit of money, once
67 00:11:21,450 --> 00:11:29,040 a year, or a couple times throughout the year, or quarterly, or if you do it a monthly subscription, it's not a lot of money. If you turn all of your money
68 00:11:29,040 --> 00:11:35,580 over to someone else to manage it, believe me, they're not watching it, like you would be watching it, they're not going to nurture it, and they're not going to
69 00:11:35,610 --> 00:11:40,530 cultivate it. Okay, and and try to increase its earnings potential.
70 00:11:41,820 --> 00:11:50,070 Funds, by far and large are just turning everyone else's money, they get fees and such. If it happens to make money, then great, then you're going to talk
71 00:11:50,070 --> 00:12:00,720 about how great they are, and you'll bring other people in. But really, they're not in a position to guarantee your positive outcome, that the industry is sold
72 00:12:00,720 --> 00:12:10,920 that way, but we're not owed anything by these investors or these funds. So it's better for you to spend a little bit of money, invest in your insights, and
73 00:12:10,920 --> 00:12:19,440 trust your own decisions. Because that way, you're minding the store, no one's gonna mind the store or mind your own business, okay, better than you. As an
74 00:12:19,440 --> 00:12:26,640 investor as a trader is the best advice you can give yourself and your children is you have to mind your own business do you have to do the things yourself?
75 00:12:27,750 --> 00:12:34,620 Someone else managing your money isn't going to appreciate the things that you know are coming up, children are getting ready to graduate and go and go into
76 00:12:34,620 --> 00:12:41,850 college, you have money for that, okay? The guys that run these funds and gals that are on the phone, they don't know what your family needs are, they don't
77 00:12:41,850 --> 00:12:48,930 know what your time horizons are, they may ask you in a generalized survey at the beginning to open up the account or maybe in passing and talking, if he even
78 00:12:48,930 --> 00:12:57,870 get talked to him at all. But generally, they don't care. So you want to be doing this informational scan, fundamentally all on your own. And you want to
79 00:12:57,870 --> 00:13:00,990 keep it simple, short, and don't overcomplicate it.
80 00:13:06,060 --> 00:13:16,800 And obviously, your relative strength analysis is important. So when we look at the stock market, the stock market sectors, okay, which are just broad areas of
81 00:13:16,800 --> 00:13:27,600 the stock market. Inside those sectors, there are industry groups that are more specific about what type of companies are in those larger group of sectors,
82 00:13:27,630 --> 00:13:37,830 market sectors. So you have these big lists, which make up a sector, then you have sub categories, okay, or industry groups that make up those respective
83 00:13:37,830 --> 00:13:48,180 sectors. It's a chiton, enormous amount of work that literally go through all that stuff, okay, and number crunch and look for leadership and all that stuff.
84 00:13:48,420 --> 00:13:59,520 And over the last decade or so, there's been advancements in technology and trading tools. Some of them have been in the form of like heat maps, I played
85 00:13:59,520 --> 00:14:08,460 around them earlier on when he first came up. But I just found that it's much better just to trust the resource tool, like Investor's Business Daily, they do
86 00:14:08,490 --> 00:14:19,560 a wonderful job, in my opinion of sorting through sectors and filtering out leadership, industry groups, that way, you can really focus in on the stocks
87 00:14:19,560 --> 00:14:26,310 that make up the leadership in those respective industry groups. Because for relative strength analysis, really what you're doing is in a bullish market,
88 00:14:26,790 --> 00:14:35,490 you're looking for bullish sectors in the marketplace. And inside those sectors, you want to find the strongest industry groups that are going up. And inside
89 00:14:35,490 --> 00:14:42,570 those respective industry groups that are going on. You want to find the strongest outperforming stocks in those industry groups. So what you're having
90 00:14:42,570 --> 00:14:53,160 is is a bullish market, you're timing it. You're looking at the market that's predisposed to go higher, then you're looking at a sector that already has
91 00:14:53,850 --> 00:15:01,290 evidence that it's going higher because it's moving up already. Okay, so it's outperforming all the other sectors in the stock market. it. And then inside
92 00:15:01,290 --> 00:15:09,300 those respective sectors, you're focusing on the industry groups that make up the leadership, industry groups that make that sector go up. So you're focusing
93 00:15:09,300 --> 00:15:19,500 on the strongest of the strongest of the strongest during a bullish market, you cannot get better than that. That's what everybody wants to do. But no one
94 00:15:19,500 --> 00:15:26,880 understands how to do it. We all want to invest, you know, we're told to invest for the future, but we don't know what it is that we're supposed to do. And they
95 00:15:26,880 --> 00:15:36,990 should teach these things in grade school, but they don't, because they want everybody to be slaves, they want to be, you know, borrow, go into debt. Okay?
96 00:15:37,140 --> 00:15:46,680 No, you be the bank, you be the loan officer, you you help other people by giving your money out. If you have the mindset that you're going to increase
97 00:15:46,680 --> 00:15:59,070 your net worth, by investing, you do you bet on a horse race, where the horse has got, you know, previous injuries, and it just made its way into the to
98 00:15:59,070 --> 00:16:08,970 contest and who knows how it's going to perform, you know? Or are you going to back the one that has proven itself in previous races, okay. And, you know, for
99 00:16:08,970 --> 00:16:19,080 instance, you know, a triple crown, you know, those those types of horses, they are proven horses, they proven themselves in other races. So, if we're looking
100 00:16:19,080 --> 00:16:30,030 at stocks, it's better to have our focus on areas that already have predisposed movement to go higher. They're already showing relative strength, across the
101 00:16:30,030 --> 00:16:36,360 sector's, it's showing relative strength across the industry groups. And inside those respective industry groups, you're looking for the stocks to outperform,
102 00:16:36,570 --> 00:16:44,790 or going up stronger than all the other ones in that industry group. So whether you're searching for index stocks, as I've already talked before, in the stock
103 00:16:45,060 --> 00:16:54,150 selection, templates and modules that I've done on free and in the mentorship here are growth stocks, which is what really the megatrade candidates are really
104 00:16:54,150 --> 00:17:04,590 all about. It's crucial for your stocks to be leaders of their respective industry groups. Now, if you couple this with the SMT divergence, it's seen in
105 00:17:04,590 --> 00:17:14,730 the indices, okay, between NASDAQ, the s&p and the Dow, you got gold. It's amazing, the responsiveness you see in the marketplace, because really, what
106 00:17:14,730 --> 00:17:27,150 you're doing is, you're fine tuning your attention to what all the institutions are doing. Now, I have not been formally trained for stocks, okay, I've not had
107 00:17:27,150 --> 00:17:37,500 anybody, as a market maker, or a big firm, anybody sit down, tell me, this is what the big boys do, I had just totally convinced myself of it. Because I've
108 00:17:37,500 --> 00:17:43,590 seen enough of it over the 20 plus years that it's pretty easy to find these things each year. The problem is,
109 00:17:44,850 --> 00:17:56,460 I want to be in one asset class, because my intention is limited. So I'm uncomfortable Forex. For some of you, again, forex brought you to me, but it may
110 00:17:56,460 --> 00:18:06,060 not be your asset class of choice. Five years from now, you may not ever trade Forex, you may or may never trade currencies, never trade in commodities, or
111 00:18:06,060 --> 00:18:14,850 bonds. But you may end up saying you know what, I like stocks, I'm not trying to convince you of it, I'm just saying it could happen. So if you feel that tug of
112 00:18:14,850 --> 00:18:24,930 war inside internally, don't resist it, go along with it and see where it takes you. But here we have an example of Facebook. And Facebook is plotted here as a
113 00:18:24,930 --> 00:18:36,180 bar chart, and then I have the the Dow plotted as an overlay. Okay, so this is seen on bar chart.com, you can do a simple comparison chart, and put in dollar
114 00:18:36,180 --> 00:18:50,760 sign d o w i, again, it's dollar sign dow I. That's your comparison. And when you do Facebook, which is symbol FB, you end up with this chart here. And all I
115 00:18:50,760 --> 00:19:01,380 did was highlight the April time period where Facebook had a higher low while the Dow made a lower low. Now here, it's just showing relative strength. But at
116 00:19:01,380 --> 00:19:10,710 the same time, in April, we saw the Dow make a lower low, the s&p make a lower low but the NASDAQ failed to make a lower low, it had a higher low, and that's
117 00:19:10,740 --> 00:19:21,210 an index SMT. During that time, we would expect higher prices and stocks. If you go back in the mentorship, you'll actually hear me talk about how I felt that
118 00:19:21,210 --> 00:19:28,950 that we were going to see stocks go higher. And we've seen that happen. Right now we're seasonally going into a time period where it should correct and go
119 00:19:28,950 --> 00:19:38,340 lower. We'll see what happens. But nonetheless, relatively speaking, Facebook was stronger than the general market, it was unwilling to make a lower low at
120 00:19:38,340 --> 00:19:52,410 the same time. And as a result, Facebook had a nice run up from 140 to 165. So about 24 hours, 25 hours a share in terms of movement. That is nice folks,
121 00:19:52,440 --> 00:20:02,310 that's a big big move for stocks and define those types of moves. Okay in such a short span of time that What a megatrade is you want to find something like that
122 00:20:02,310 --> 00:20:12,150 that really puts out a lot of energy covers a lot of ground it moves. Now, this incident the best. Okay, I just give you as an example here for relative
123 00:20:12,150 --> 00:20:23,610 strength analysis and the effects of a quarterly earnings overlap quarterly shift, borrow a bull market already in the stock market and then applying the
124 00:20:23,610 --> 00:20:35,520 index SMT and then finding a stock that has a fundamental, strong basis. Fundamentally, Facebook has been proven to be fundamentally strong, and
125 00:20:35,520 --> 00:20:48,030 institutions are pouring money into it. And therefore we see this extrapolation on the upside for its share price. Okay, so let's simplify a little bit more.
126 00:20:48,360 --> 00:20:59,730 Okay, so for seeking mega trades in stocks, the process in simple terms begins with, we anticipate new earnings leaders. Next, we plant seasonal tendency
127 00:20:59,730 --> 00:21:08,340 overlaps for annual movements. So every year, we anticipate when the bullishness comes in beginning of the year, and towards the fall months where it makes the
128 00:21:08,340 --> 00:21:16,140 seasonal well, and rallies towards the end of the year. So we're looking for those two types of times of the year to have a seasonal tendency and to overlap
129 00:21:16,140 --> 00:21:23,580 with those respective quarterly earnings. And then we're going to refer to the direction the major stock in this season, what's what's, what's the market
130 00:21:23,730 --> 00:21:32,130 direction? Is the market trading higher, or is it poised to trade higher at the beginning of the year, or during the fall Mark months, because that's paramount,
131 00:21:32,160 --> 00:21:39,870 because you need that for the megatrade to unfold, and then you perform fundamental screening. Now again, I'm relying on an Investor's Business Daily,
132 00:21:39,870 --> 00:21:48,690 as I'll show you after this slide. But you have to do some measure fundamental screening to pick out stocks that are poised fundamentally to go higher. If
133 00:21:48,690 --> 00:21:56,370 you're not making money, chances are they're not gonna go higher, right. So the high flying stocks that go up are the ones that make tons and tons of money.
134 00:21:56,700 --> 00:22:07,170 Okay, highly profitable stocks not just did surprised and made money yet for the first time, they want to see an increase of sales over each quarter, previous
135 00:22:07,170 --> 00:22:16,380 year's quarter, the quarter really, relationships are the increasing annually annual sales increasing is their new products coming out all those ideas that we
136 00:22:16,380 --> 00:22:23,130 mentioned in cancelin, those things that lead well to overall profitability for the for the company,
137 00:22:25,050 --> 00:22:36,060 that I'm going to perform a relative strength analysis to filter out leadership stocks, based on sector and industry groups. And again, I rely on Investor's
138 00:22:36,060 --> 00:22:43,380 Business Daily to do that, for me, it literally takes minutes, as I'll show you. And then obviously, once you have identified the stocks that you like, you would
139 00:22:43,380 --> 00:22:53,070 go into the options chain and look at the Greeks to determine which option and what strike place you would look to trade for an opportunity. And yes, during
140 00:22:53,070 --> 00:23:03,420 the month of August, I will talk about the options, and the Greeks teaching you the Gamma, Theta, delta and all that business. Totally, we know what we're doing
141 00:23:03,420 --> 00:23:14,460 in terms of stock trading with options. Now, obviously, this is an overview. And it's gonna be fully refined and defined in the PDFs that you get for stock top
142 00:23:14,460 --> 00:23:25,290 down analysis in August. But I want you to think about the process of how we would go into every year the same way every quarter the same way looking for
143 00:23:25,500 --> 00:23:35,460 these influences. Now, between the spring and fall months. Again, that's usually a consolidation time, generally. But there are times when we can use the SMT
144 00:23:35,460 --> 00:23:45,510 divergence in the major averages to time buying opportunities. If there's a higher low in one of the averages when the other to make a lower low, that's
145 00:23:45,510 --> 00:23:54,630 implying that there is a small short term bullishness in the marketplace, you can short term trade these types of stocks using Investor's Business Daily
146 00:23:54,630 --> 00:24:05,790 fundamental sort in scan and timing with relative strength analysis, and when General markets poised to go higher. So by having those ingredients, if you
147 00:24:05,790 --> 00:24:15,120 will, you end up getting really amazing big pops in the stock market in these respective stocks. So let me take you over to investors business stealing show
148 00:24:15,120 --> 00:24:23,100 you how easy it is, as a customer of using that resource. I think it's one of the best things out there. If you're going to be investing in stocks. If you're
149 00:24:23,100 --> 00:24:31,890 not going to be investing in stocks, then obviously you can just watch this for entertainment purposes. And I guess be bored pie but long short is this is one
150 00:24:31,890 --> 00:24:47,100 way you can find amazing stock movers each year. Okay, folks, run the Investor's Business Daily website. And we're going to assume that, you know, we've arrived
151 00:24:47,100 --> 00:24:59,190 at a time when the stock market is poised to go higher. We're at a quarterly impasse where we expect some shake up in earnings. We expect the new leadership
152 00:24:59,190 --> 00:25:11,610 to step in For this, this quarter, and we're looking for fundamental basis to determine what stocks we want to be looking through. And finding that technical
153 00:25:11,760 --> 00:25:22,380 relative strength divergence, which, in my opinion is like the magic signal. Okay, that's the silver bullets, pattern for trading stocks, it's to me, it's
154 00:25:22,380 --> 00:25:32,850 the absolute best thing out there. Everything else pales in comparison, because it just shows real institutional sponsorship, you, you can see it in price, when
155 00:25:32,850 --> 00:25:39,480 a stock fails to make a lower low, and it's an industry Great, that's already stronger, and it's in a leading sector in the stock market, when the stock
156 00:25:39,480 --> 00:25:48,210 market's poised to go higher. Wow, you just can't get any better than that. Not only thing that's next is, you know, finding undervalued call option, and just
157 00:25:48,210 --> 00:25:59,970 get in there and take it, take me and take it out. But we're gonna go to the very cold leaderboard, okay. And you click on that. And this is all it takes to
158 00:25:59,970 --> 00:26:11,550 do a fundamental sort with Investor's Business Daily, it used to be, I would go through all the tables and find all the relative strength ranks of 90 or better
159 00:26:12,750 --> 00:26:27,090 the, all the bells and whistles that would be offered by the Investor's Business Daily concept, you know, Rs, relative strength and earnings per share, you know,
160 00:26:27,180 --> 00:26:40,260 their institutional, institutional sponsorship rating, all those little tabs, which I'll show you in a second here, but they've really streamlined it. Now,
161 00:26:40,260 --> 00:26:56,160 today, it's a lot easier. So you go to the leaderboard, you can go to IBD, top 50. And when you click on that, it gives you a complete list of the top 50
162 00:26:56,190 --> 00:27:11,730 sorted by way of their fundamental ranking system cancelin. Okay, and you can look at all of the research tools over here. And I'll just take a look at t a l,
163 00:27:12,180 --> 00:27:25,530 okay, ta l, we'll go over to bar chart.com. And we'll put that in T A L and leave it sorted against the Dow.
164 00:27:28,440 --> 00:27:39,240 Okay, and right away at that same time, and we can see the Dow making that lower low right here. What was happening in this stock, it was not making a lower low.
165 00:27:39,900 --> 00:27:51,840 Okay. It was during a consolidation, when Smart Money steps and and buys. And from about about $100 a share, all the way up to $150 a share. Folks, listen,
166 00:27:52,500 --> 00:28:03,660 that is a phenomenal, phenomenal price move. It's huge. It's It's enormous in terms of how much potential is there is in these types of movements, and most
167 00:28:03,660 --> 00:28:12,120 stock traders dream of seeing these types of moves. Now granted, we are in a kind of a fast market, and market just keeps going higher and higher. But every
168 00:28:12,120 --> 00:28:23,490 single year, this method works. Now, you can do it the hard way and go through all of the sorting of looking for the IBD ranking systems and do each individual
169 00:28:23,490 --> 00:28:33,450 thing and why you would do that now it's would be silly. But that's how I used to do it. And it would literally take me a couple hours on a weekend when I was
170 00:28:33,450 --> 00:28:42,990 getting close to these times of the year Chessy fall. And once I had my sortlist my watch list to see will okay, I would just go through every day and I would
171 00:28:42,990 --> 00:28:57,330 look for these divergences okay to occur at the time of the year when it should occur. And if I have the industry group leader, I have the sector that are on
172 00:28:57,330 --> 00:29:05,280 fire right now. Excellent. That's going up. And I can filter out the ones that are strongest in their respective industry group. Oh, man, I got it. I got it
173 00:29:05,280 --> 00:29:14,460 licked. But let's take a closer look at this right here. This is the Dow right in here. And let's take it that same time period. Again, it's this low here is
174 00:29:14,460 --> 00:29:31,800 essentially March 27 2017. And the low here is April 19 2017. We're gonna go over to the NASDAQ. You can see the higher low the NASDAQ was unwilling to go
175 00:29:31,800 --> 00:29:44,520 lower. Now, NASDAQ is highly slanted for technology. Okay, so tech stocks are going to be really outperforming on the upside. But we can see the divergence
176 00:29:44,520 --> 00:29:59,970 here with NASDAQ failing go lower. So s&p cash. You can see it the same time period failed to make a lower low and then at the Dow
177 00:30:05,220 --> 00:30:17,520 clearly making that lower low. So we have the index s&p Divergence at quarterly shift. Higher prices were called earlier in the year go back and watch all the
178 00:30:17,520 --> 00:30:27,240 videos. There's only a few times it talked about the stock market said we make a higher high. And we've been trading rather aggressive on leadership stocks. Now
179 00:30:27,240 --> 00:30:35,700 let's go over here and go and look at a company. Let's go to Li T
180 00:30:41,310 --> 00:31:00,180 li t. Now you can see this stock has made a lower low in here, while it still had a pretty good run in price higher with the timing of that lower low in the
181 00:31:00,180 --> 00:31:10,440 Dow but failure swing on the NASDAQ. That's our index s&p divergence, we did not see a higher low form in this li te stock. So while it was still in the
182 00:31:10,440 --> 00:31:21,060 fundamental sort, or screening by IBD, it would not have been an ICT buy for megatrade because it made a lower low, we want to find stocks that make that
183 00:31:21,060 --> 00:31:29,340 higher lower tier because the institutions will step in, they're gonna be buying a lot of it. So we'll go back over to the Investor's Business Daily. Okay, and
184 00:31:29,340 --> 00:31:30,990 we'll look at the next one and t ri.
185 00:31:47,580 --> 00:31:58,320 Okay, and we have a stock here that just recently gapped away from a consolidation. Okay, so we've already moved away, we gapped up, we have a big
186 00:31:58,320 --> 00:32:09,150 gap in here. So what we think and in terms of institutional overflow, chances are that even though we have the s&p divergence right in here, and a higher low
187 00:32:09,180 --> 00:32:18,300 formed, price could come down here and closing that gap. Now it's interesting to how price came all the way down into the top of the gap, found support left the
188 00:32:18,300 --> 00:32:27,510 gap there and rallied, it could very easily just came down and closed in that gap. So we've already extended away too much and left a big old gap. This would
189 00:32:27,510 --> 00:32:36,840 not be a good candidate to be a buyer for stocks because that gap could close. And we don't want to be a buyer of a move that's gapped away like that. We want
190 00:32:36,840 --> 00:32:45,840 to wait for the market to be more consolidation and just recently leaving consolidation, this is too much of a move away from the consolidation that
191 00:32:45,840 --> 00:32:46,710 previously existed.
192 00:32:52,770 --> 00:33:02,250 So we'll go back to IBDs 50 List Okay, and we'll look at S T MP.
193 00:33:17,010 --> 00:33:27,570 Okay, similar, we saw even though they had a nice price rally in here, at a time of the s&p divergence with this lower low on the Dow, we were making lower lows
194 00:33:27,600 --> 00:33:35,880 in the stock price as well. So again, this would not be a mega trade, even though it did perform nicely. This is not one we will be trading. So we're gonna
195 00:33:35,880 --> 00:33:42,990 go back to our list again. And I'm not going to do all 50. So you guys know the next one is a n e t.
196 00:33:53,940 --> 00:34:03,960 Okay, and we've had price and a recent consolidation here and then it left the consolidation, we went into another consolidation here. So it was much more of a
197 00:34:03,960 --> 00:34:13,920 base in here and during the s&p divergence period, lower low in the Dow, this stock was already in a consolidation. So this is one that would have been a
198 00:34:13,920 --> 00:34:22,410 selection in my opinion. To make a move up even though I had the gap here, we had consolidated sideways for a little while. At the same time the s&p
199 00:34:22,410 --> 00:34:40,380 divergence was occurring in the indices, and in price moved up from about 130 up to 160 $162 a share. So not bad, not $30 a share. It's a nice big hole move
200 00:34:40,380 --> 00:34:45,600 folks. Back over to our IBD list again, and
201 00:34:52,170 --> 00:35:08,940 try find one that I can clearly see have performed well Listen here had a really nice trend here, we'll see Ctr l Ctr l.
202 00:35:18,090 --> 00:35:32,490 Okay, another price had gapped away that we consolidated s&p divergence on this swing here, higher low formed here. So we had, I really wouldn't like this one
203 00:35:32,490 --> 00:35:43,980 because it's below $20 a share. I like to see stocks above $20, preferably $25 a share. But you can see it had a nice little move in here, about 10 bucks, which
204 00:35:43,980 --> 00:35:52,020 isn't all that terribly exciting, but look really nice technically, but it would have fit the criteria had it been above 20 $25 a share.
205 00:35:59,280 --> 00:36:09,540 Now we're gonna go and look at the list in a full list version. And we can sort through and see all of the I like this rating right here to Smart Select
206 00:36:09,540 --> 00:36:22,290 composite rating, okay, and I want 98 or higher. Okay, because what it's done is it's made a composite ranking of the earnings per share rating, the relative
207 00:36:22,290 --> 00:36:34,590 strength rating, industry group, relative strength, accumulation, distribution writing. And by blending all these key tools that IBD has, basically patent for
208 00:36:34,590 --> 00:36:45,330 themselves, they can make a composite rating number over here, and they sort this IBD 50, it used to be IBDs, top 100. And they've condensed it down to now
209 00:36:45,330 --> 00:36:55,350 50. So me, to me, it's a much easier approach to go through 50 stocks, but you can go through all of them. Okay, and what we're going to do is we're going to
210 00:36:55,350 --> 00:37:02,010 look at the share prices in here, and we'll find one between 25 and say $80 A share
211 00:37:07,980 --> 00:37:22,110 Okay, Fox factory holdings, so it's fo X f composite rating of 99. So we're gonna look up fo X f. So f ox, F
212 00:37:27,420 --> 00:37:39,060 Okay, and we can see that during the time of the s&p divergence in here, lower low on the Dow NASDAQ, higher low formed $27 A share went up $10 a share. Okay?
213 00:37:39,420 --> 00:37:46,560 Not a huge amount of movement. Okay, but look at the performance not bad. It's like a 50% return
214 00:37:54,270 --> 00:38:03,900 Okay, we're gonna look for another one. Right here, why why incorporated ads. So we'll look at why why.
215 00:38:14,130 --> 00:38:29,400 Okay, and here, we made a lower low. So that wouldn't have been one for us to pick that would have made the cut. The next one we'll use is pay comm software
216 00:38:29,430 --> 00:38:30,210 pay see.
217 00:38:39,210 --> 00:38:46,890 It's really easy to do this, when you're sitting down to do the analysis. You just want to go through and sort through the stocks, put some music on, get a
218 00:38:46,890 --> 00:38:56,010 pen and pad and literally just go through and the ones that meet your criteria, okay, that make the fundamental list. You have that stock on your list and you
219 00:38:56,010 --> 00:39:02,850 go through and you keep watching until the indices create the s&p divergence. And then you go through and you find the stocks. Here we have the higher low
220 00:39:02,850 --> 00:39:15,630 formed, it's trading at around 50 $50 A share price rallies up to 73 hours plus, so it's a nice little move there. About 40% or so increase and that's the thing
221 00:39:15,630 --> 00:39:25,950 about that folks, that's that's decent in less than, you know, a year. So can you imagine what the options were paying out? Okay, now we're going to pull up
222 00:39:28,980 --> 00:39:41,700 our next our list let's get something over 50 bucks. We'll do pay pal holdings py PL py PL.
223 00:39:47,400 --> 00:39:56,280 Okay, really nice. Higher low formed during the s&p divergence. So we know institutional buyers are coming in. We're in a consolidation. We're about ready
224 00:39:56,280 --> 00:40:09,480 to breakout to a new high and boom gap up here. You're later on after the divergence. Okay, so trading around $42 a share, up to $59 a share. Nice move
225 00:40:09,480 --> 00:40:29,010 there really nice move back to our list and here's one here trading at $4 A share CNC with that one CNC
226 00:40:37,980 --> 00:40:49,050 Okay, we have a higher low here at $70 A share trades up to $86 or $16. A share appreciation, nice movement during consolidation ready to break out to higher
227 00:40:49,050 --> 00:41:13,170 highs. So it's nice move there and we'll scroll down. Dave and Busters just took my family out to that matter of fact, it's kind of cool. Their symbols play a
228 00:41:19,020 --> 00:41:31,560 really nice signal here. higher low, lower low s&p Divergence by around $60 A share goes up to $73 a share. Nice movement there about $13 A share appreciation
229 00:41:38,850 --> 00:41:44,310 and here's pra Health Sciences, P R A H.
230 00:41:54,000 --> 00:42:17,520 Okay, higher low formed here. And price moves up about $15 a share. Make sure I got that right 246-810-1214 16 About About 16 $17 a share, not bad. And we'll go
231 00:42:17,520 --> 00:42:35,190 back over here. And we'll go through and look at Activision Blizzard Incorporated. So a TVI at V eyes assemble a tee the eye. Okay, and we have a
232 00:42:35,190 --> 00:42:45,150 higher low here formed as well. So we can see the institutions are stepping in. We're close to this old high. So we broke out with a gap here, when sideways,
233 00:42:45,570 --> 00:42:57,630 going up and consolidated again, during the s&p divergence, that's a buy at $49 a share, trades up to $62 a share, not bad, very nice movement there. Now this
234 00:42:57,630 --> 00:43:24,750 is just the IBD 50. Okay, there's another sort that they do. Just want to find one more. Move in here. We'll look at Massimo Corp, ma si. And as I and this one
235 00:43:24,750 --> 00:43:36,270 here already really extended up, swallow consolidation in here didn't go lower, rally a little bit, but then gave up the ghost aggressively in our trade. It's
236 00:43:36,270 --> 00:43:45,540 after the fact that we had all this extension, no real consolidations in here, that makes it suspect to me, you can see it's a turtle soup of rods little
237 00:43:45,540 --> 00:43:56,670 button and plummets. So while it still was fundamentally there, we'll say that we actually took that when that could have been a loser. Not bad for the trades
238 00:43:56,670 --> 00:44:10,470 that we sorted through real quick as a paper trading idea from hindsight, the stocks were fundamentally strong. And another thing they do is an IBD sector
239 00:44:10,470 --> 00:44:28,410 leader. And you can go through these and they'll be similar. And you just got to go through the whole process of going through the entire list. But by clicking
240 00:44:28,410 --> 00:44:44,310 on this tab in this area here, it gives you a group of stocks that are leadership for their respective sectors. And here's one for Facebook. Can we use
241 00:44:44,310 --> 00:45:00,240 it in the slides? Say Facebook FB is the symbol naturally. So we'll go over here to FB, FB again this like the slide showed real clear, obvious diversion It's
242 00:45:00,690 --> 00:45:09,060 okay, just above the old highs in here during this consolidation, so we didn't really extend too much. We were in consolidation again, s&p divergence, higher,
243 00:45:09,060 --> 00:45:22,410 low formed, big, huge institutional stepping in 140, trades up to 164. So 24 hours a share price move. Really nice. Going back to the sector leaders, we'll
244 00:45:22,410 --> 00:45:39,450 go down to where we looked at why why? We'll look at. We'll look at looking for one from like, 60 EDL. And this one here, okay, well, look at this one here, ay
245 00:45:39,450 --> 00:45:54,930 ay ay oh, ay share price of a $9 Share, basically 90 bucks a share. So ah, oh, I and this one here, while it did move nicely, we had a lower low form. So that
246 00:45:54,930 --> 00:46:04,020 would not have been a candidate. And we've also, we left this consolidation, we have a little bit of a gap in here. So that would have been a potential fill,
247 00:46:04,050 --> 00:46:12,660 notice how it went down to the top the gap found support and rallied away. So yes, this would have been a nice mover. But the criteria is it has to have a
248 00:46:12,660 --> 00:46:33,660 higher low and didn't form that. Alibaba Baa Baa. And don't be concerned about the share price being over 100 bucks. Because we use the option, and the option
249 00:46:33,660 --> 00:46:45,540 will give us a lot of leverage. So we have the old high here, consolidation, small little rally when it consolidation again, that's it divergence higher low
250 00:46:45,600 --> 00:46:54,930 by around 112. Went to 155. Huge, huge move folks. Big big move. Nice big pharma there.
251 00:46:57,000 --> 00:47:08,010 And that's a real quick example of how you can use IBD as an investment tool to sort through fundamentally strong companies without going through earnings per
252 00:47:08,010 --> 00:47:18,420 share stuff without going through all the stock tables, and using all the resources that other folks would otherwise inundate themselves with. Let let
253 00:47:18,450 --> 00:47:26,850 folks out there that number crunch better than you and fasten you do the work for you. And I think in my personal opinion, Investor's Business Daily, they
254 00:47:26,850 --> 00:47:36,360 ferret out really, really good, fundamentally strong companies. But by themselves, they can make the list all day long. And just because they're on the
255 00:47:36,360 --> 00:47:46,890 list, and you can see just by the little graphic pictures they have here, like for instance, MKS instruments, okay, look at the performance of this thing. It
256 00:47:46,890 --> 00:47:55,860 went way down, just because it's on the list doesn't mean it's going to perform. They don't teach you the s&p divergence in their studies and their in their
257 00:47:55,980 --> 00:48:05,070 teaching stuff. Okay. That is something that I picked up from Larry Williams. Now I applied it with William J. O'Neill's fundamental stuff. So I put the best,
258 00:48:05,070 --> 00:48:14,640 in my opinion, the best of the best, the best technical pattern, I think exists in trading is the relative strength divergence. It's seen in stocks against the
259 00:48:14,640 --> 00:48:24,120 major averages. And if you do that same thing with the strongest sectors, in the strongest industry groups at a time, when it's going to go higher. Ah, you got
260 00:48:24,120 --> 00:48:33,660 it licked. It's it's not, I'm gonna say it's easy to find the high flyers, they're graphically standing out in the charts, you can clearly see them
261 00:48:33,660 --> 00:48:41,700 divergent. And when they feel the things that lower low when the indices are diverging across the three, when fate one fails to make a lower low, that means
262 00:48:41,700 --> 00:48:51,270 that there's big buying coming in. That's why the indices not making that lower low. So what are they buying? Well, NASDAQ is the one that was failing to make a
263 00:48:51,270 --> 00:49:02,370 lower low. So that means technology stocks are going to be outperforming clearly and if you go through all of the sectors, like if you go to a website here, I'll
264 00:49:02,370 --> 00:49:14,310 give you go to investor guide.com. You can go through all of the major sectors, these are two major sectors here, we can go into technology, click on that and
265 00:49:14,310 --> 00:49:27,870 what it'll do is it'll give you all the stocks in that individual sector, you can go into the industry group, click on that and say you want to go to so you
266 00:49:27,870 --> 00:49:51,240 want to go to technical and system software. Okay. Click on that. Okay, and it gives you all the stocks that make up this respective industry group. Technical
267 00:49:51,600 --> 00:50:04,320 and system software. So you can see, you can do it the hard way and go through sorting all this business yourself. Okay, and try to find something. Or you can
268 00:50:04,320 --> 00:50:22,440 just simply use IV D. There is a gentleman on YouTube that I watched a couple months ago, he did a breakdown on how to come up with a relative strength list
269 00:50:22,440 --> 00:50:36,000 or sword for stocks. And it uses tele charts, t e l e charts, it's like a $9 or $20 929 to 30 hours or 10 hours a month package where you get in and you look at
270 00:50:36,030 --> 00:50:46,650 the stock prices, and you can sort through there. It's like a screener. And you can click on and do like different sorts and different formulas and stuff. He
271 00:50:46,650 --> 00:50:54,090 actually does a video and I'll, I'll show it to you next time we do our live session, I'll pull it up and show you the link. And I'm not going to include it
272 00:50:54,090 --> 00:50:55,530 here because this is part of my
273 00:50:57,090 --> 00:51:05,820 market and stuff. So during a live session, I'll just pop up and share the link with with y'all I'm sure he won't mind that. But I think he did an interesting
274 00:51:06,180 --> 00:51:19,620 approach to scaling through and sorting the stocks that were I guess, by His definition, fundamentally, and technically, I guess aligned, where you end up
275 00:51:19,620 --> 00:51:30,420 with a watch list. He hasn't T to either showed you in terms of the index SMT that to me, I think is is the silver bullet everyone's looking for. And if they
276 00:51:30,420 --> 00:51:36,870 understood the conditions of the marketplace, which is obviously the the stage you have to know when the markets going to move, whether you're trading
277 00:51:36,870 --> 00:51:46,380 commodities, forex or whatever. But once you understand that the stage is set, that it's going to go higher, then if you start looking for that little crack in
278 00:51:46,380 --> 00:51:56,490 the averages between NASDAQ Composite Index, the s&p cash, and the Dow Jones Industrials, by plotting them on a daily basis and looking for them to diverge
279 00:51:56,640 --> 00:52:05,100 at logical time periods, every three months or so, three or four months, there's a time when it will diverge. And when it does, you go in and you do this same
280 00:52:05,100 --> 00:52:12,870 sorting procedure. And I'm telling you to only do it on the buy side, there's ways you can sell short. And I'll teach you that in August as a separate
281 00:52:12,870 --> 00:52:22,260 teaching. But predominantly, the markets more predisposed to go higher. And it's better to do a sort looking for stocks that are going to go up, because there's
282 00:52:22,260 --> 00:52:33,930 more likelihood to see funds mutual funds, in large firms pouring money into a company than they are leaving them. Okay, not to say that institutions don't
283 00:52:34,020 --> 00:52:44,490 leave a asset or a stock. But it's better for you to be focusing on stocks that they're pouring money into, because they're going to spend more money and pour
284 00:52:44,490 --> 00:52:55,500 money into it longer periods of time than they are just to get out of the stock. So the moves are much more longer in duration when there's a buying opportunity
285 00:52:55,860 --> 00:53:02,100 and selling UCS really quick and short. And they were brought in you got to know what you're doing to sell short and stocks. So hopefully you found this teaching
286 00:53:02,100 --> 00:53:09,990 insightful. And I'll give you more insights. Obviously, when we go into August, I'll give you the complete step by step approach in PDF file and in practice,
287 00:53:10,020 --> 00:53:20,070 you can see me do it. But this is to kind of like open your eyes up to using an Investor's Business Daily as a resource to do all your fundamental work for you.
288 00:53:20,370 --> 00:53:27,780 And then blending that with our technical approach to trading and feeling smart money's accumulation and distribution patterns. Until next time, I wish you good
289 00:53:27,780 --> 00:53:28,890 luck and good trading