There has been some funny business going on in the financial sector.
There is a combination of a few key indicators that we are not seeing very often in the market.
When we see outliers in the markets in the way of multiple indicators aligning as we saw this morning, it puts you in a position to make some serious money in the next few days or even weeks, so long as you are watching the same charts I am.
A closer look at how I use the charts.
As you know, I trade the technicals. In a nutshell I look at data and prices. Using a specific set of indicators helps me quantify the data by plotting things such as the moving average price of a stock, I like seeing the 20, 50 and 200-day moving average typically. You can get a lot of info from just those three lines but when you combine them with the Bollinger bands, RSI, and open option interest youre really starting to have a recipe for success.
Of course there is more to trading then just a few lines on the screen. That is why I am here.
I want to bestow upon you my 30 years of trading experience. Show you my technical tool box and all the tools inside. Teach you how to use them, and sneak in a few ‘between-the-line’ trades as my followers have coined it before the people upstairs catch me.
I love to see you guys making money and having fun with each other during the stream and on the 24/7 discord chat.
If you watch the chat you might see some people with names that have ‘NT’ or ‘PN’ in them, you might even think they work for me because they are SO WELL VERSED in the information I cover. Youd be wrong.
Those are people who are proud members of my Penny Nation and/or Night Trader service. If you ask them, I’m sure they will say they love the service they get from me and love the community they are a part of and helped to build.
You can even ask them, they won’t bite (too hard, at least) I know they will only have good things to say about what we do behind the velvet rope.
Look at this unusual combination
This morning I showed you a chart for Morgan Stanley
It was really doing justice for portraying a number of the indicators I use. Here are the details of what we saw.
The first thing that sticks out like a sore thumb on this chart it the narrowing Bollinger Bands…
Bollinger Bands help us to measure volatility in the market. The further apart the bands are the more volatility we will see in the stock. The closer they are the less volatility we will see. Simple right?
One thing that a newer investor might think after learning this is “less volatility means the stock won’t move much so why would I trade something with a narrow spread like this?
According to John Bollinger, periods of low volatility are often followed by periods of high volatility. Therefore, a narrowing of the bands can foreshadow a significant move in one direction.
Okay, that makes sense. Now, how do we know what direction we need to trade to make some money off of the event?
This is where other indicators become a necessity. Have you ever heard somebody say ‘the trend is your friend’? Well, unless this is your first experience with the market or myself then I know for a FACT you have heard it before.
So what do we use to see the trend? In this case the trend it quite clear but many times the noise of the market will hide the trend. This is where our 20- and 50-day moving averages come into play. These indicators remove the noise from the chart by taking the average price of the stock of the last 20 or 50 days and show us a clear trend that we can check off on our trading checklist. In this case we are showing a clear bearish trend.
WE know we are about to see the stock hit heavily with volatility and it should follow a downward trend right?
We are not quite there yet. We need to figure out the details of the trade so we know when we need to get in and when we need to get out.
If this is how my session on Money Morning Live go – I get to break down charts, explain how to read them, what tools to use – just imagine what goes on behind closed doors where I am allowed to tell you the full trade details.
Why do I use data and Technical analysis?
This is a question I get A LOT. Why do it the old fashion way? Why take a set of rules and indicators and trust my hard earned money with them?
Because they work.
The language is very clear here rules are a set of explicit or understood regulations or principles governing conduct within a particular activity, in this case reading the markets.
There are still a lot of people out here who trust the headlines or any given news source to get their information. They hear what the news has to say about any given company and they run to buy in.
The big news cycles we are seeing today are there for two things, to entertain you, and to grab your heart strings and get you emotionally invested in what they have to say.
They are ran by people who, unavoidably will have a bias.
This will change the way you are going to be trading if that is your primary focus.
When we are talking about something as serious as your money and your investments we cannot take into account how we feel. The market is cold and heartless, it dosent give a S%*+ how you feel if I can be frank with you.
BUT, when you look at the data and trade based off factual occurrences in the market it leaves no room for the things that get you in trouble in your account. My Night Trader and Penny Nation members know this about me, I can say things with confidence knowing that it isnt muddled by opinions and my personal bias.
Am I right 100% of the time? No. but I can say that I am right more often than not.
That is the beauty of what we do.
I will not give you conditionals saying IF this happens, or this MIGHT be the case. I am only able to avoid this by understanding what the market is doing and being able to prove it with the rules I teach each and every day.
I’ll see you all tomorrow. I’m heading out on the boat with my daughter to relax a bit tonight so I hope you enjoyed another one of my rants.
Remember, learn to read the charts like I do or let me do it for you in my Night Trader room that’s the best way for you to make money in today’s markets.
July 14 2022