Seeing Potential Entries Clearer | Getting Started with Technical Analysis | 3-26-24

hello and welcome to getting started with technical analysis my name is James Boyd I will be your guide today as we explore the topics of making entries and exits easier to understand uh just real quick we also have Lee bow with us as well fellow instructor and we welcome him and we welcome all of you here today now just real quick uh if you might be wondering you don't look like Cameron May I'm not Cameron May okay and uh so he is out today I was he asked for some help to cover this class and s

o I'm going to be talking really about making entries and exits easier to understand we want to really go into two foundational Concepts here today and make sure we're really clear on how to use those now just real quick as we're getting started uh remember with what we discussed here today we're mainly going to be talking about stocks but if you choose to let's say consider options remember that options carry a high level risk are not suitable for all investors also understand that short option

s can be a signed at any time prior to uh the expiration regardless of the in the money amount we will be using the paper money application the desktop version also known as the software we will reference that and we'll show uh some setups there also remember when we talk about investing all investing involves risk so uh I I started my I start investing really back uh and I want to kind of show something just real quick we'll bring it up right there started inves investing back in 1996 in Bowlin

g Kentucky if someone would actually go back to that July 1996 and teach me these two things you know I think it could be helpful to understand I think as we're learning let's say whether we learn about technical analysis we learn about fundamental analysis options there's lots of different things out there but what are some foundational Concepts that might be meaningful and very important okay so I want to kind of go over I want to kind of use a sheet of paper just real quick and we're going to

kind of type something draw something up and then we're going to look at application so first off one of the first things that many investors uh realize is how do you find Trends okay now one of the most foundational ways to find Trends is we're looking for the price to be greater than the 10day I'm going to say exponential moving average okay and the reason why that's important is the investor is looking for momentum price momentum okay the second thing foundational price greater than the 10da

y EMA exponential moving average and 30-day SMA why this is going to give us momentum okay and Trend okay now there's let's say let's say that one time I H had a conversation and the conversation hypothetically went like this hey James I actually bought stocks that were below the 10 or below the 10 and the 308 moving average and I consistently lost money over time sometimes people just kind of want to test what these points are didn't work out very well there's a reason why people say what they

say from experience okay so a foundational concept we're going to be talking about is how do we find stocks that have momentum how do we find stocks to have momentum and Trend the way we do that is use moving averages actually see that that is the foundational point but that's not where we're really going here today now the biggest thing that we really want to talk about is entry spots when you look at for example the entry spots you showed me a chart and it's mainly all going to come down to tw

o main things okay it funnels down into two main things chg which actually stands for close higher Gap okay or it it's got going to be actually called cold which came from myself and a gentleman named Kelly it stands for actually close uh above high of low day now want to kind of just see just real quick on here if there's any way I don't think I can so I thought I could use that but don't worry have no fear one note is here and uh what I want to do is I want to kind of draw this up and we'll us

e I'll use this as my little sheet of paper now the biggest thing is when we take a look at this we're looking for remember the two foundational concept price above the 10 momentum price above the 10 and 30 where we're seeing momentum in Trend what I'm going to do in this case is I'm going to use a black line to depict okay the moving average or a moving average okay there's the moving average line and what you're now going to notice is I'm going to use let's say uh green candles and what I'm go

ing to do is kind of draw this up now the first thing I want you to understand is notice where the candles are in relationship to the moving average above then all of a sudden we get a higher high and all of a sudden the red candles start to appear red candle red candle okay so the first thing that usually freaks some investors out is I see red candles some investors love red candles because they understand that the red candles are a setup for a bullish entry the red candles are a pullback poten

tially to a moving average which could act like a support level now what I want to kind of say is when we take a look at this when we get the price to where it falls down to let's say a moving average we could start to get let's say a green candle near the area of support for some investors a green candle like this is not enough to consider an entry for some investors but some investors might be looking for the next day in the morning to Gap up okay let me kind of just be crystal clear so this i

s where we close one day right and then the very next day we open up higher so let's be very specific here what do we mean by this so this is really called a close higher Gap entry so when we say a gap entry we're talking about the price greater than okay we'll just use that price greater than yesterday's close the entry that someone might be looking for is the first 60 to I should say the first probably hour and a half of the Gap day okay so when I say the Gap day what Gap day we talking about

we're talking about that right there okay the first stren candle near the moving average that's just an update the investors looking for the price to Gap up showing that other investors might be trying to play The Gap entry okay now just for short we just really label this as chg close higher Gap and you'll see that in just a sec now the question really comes is where does the investor consider in setting the stop well and you got to remember this this might be for you the first time you've seen

this but it ain't our first rodeo okay now if you take a look at this as far as setting a stop let's be 100% Crystal Clear where is the investor setting the stop well some investors might set the stop right below the open setting stop Below open of first green candle okay and so what we're doing is taking less two to 3% okay that's really what it's looking at okay so and this is a foundational concept when we talk about getting started with technical analysis because if you kind of understand w

hat we're doing here is when you think about this where it's running up let me kind of draw this if we run up and the price pulls back and we go up up if that stock were to go down Okay so let's kind of draw this up this is a higher high okay that's a higher high this right there higher low well if all of a sudden the price goes up a little bit and then goes down what does this make this now that is not a higher low that is not an equal low this is a lower low that's why investors will take take

the open of the first green candle set the stop low there and if it goes below that point it's out why well because you're not trending in that in that bullish case anymore you're now making a lower low if a bullish investor is planning a bounce setup that's not what they're looking for they bought it thinking it was going to go up not go down below where it started the Bounce from and falling down through that that's not what they're looking for okay now so this right here is probably somethin

g if we kind of said look we see a 100 setups how many times are we're going to see a CH some investors might say a third of the time that maybe a minority they're probably going to see a CH now what what affects if you're going to see this type of setup more how bullish the market is if the bullish is more if the bullish trend is strong okay you're going to see a lot of Gap entries on the indexes uh on stocks maybe on sectors Etc you're going to be more likely to see those gaps tend to happen w

hen the market is stronger the vix is falling and or the vix is low okay so this is one of the foundational Concepts okay now I'm going to kind of show you the second entry before we look at our first kind of trade example when we go back down to let me just bring this up and slide this down okay now if we take a look at this the second example let's give ourselves a little room here remember what we said the foundational concept was foundational concept is looking for the price above a certain

moving average or both and what we said here is the price is really going up green candles represent up days okay red candles represents down days and by the way as a takeaway you should be able to teach this to somebody and make it clear now remember red candle provided that they are above the moving average is not pandemonium fear chaos they are the opportunity for a bounce setup okay so we need to change our view on oh no red candles are bad no the red candles are good because the price is fa

lling back down to support and it's in the process of making a potential higher low now I want to kind of talk about the difference that we're going to see here so maybe we actually fall down to the moving average that's upward trending and all of a sudden we see a candle that looks like this now what's been taught to us in getting started with technical analysis this could be a bullish engulfing so we're just talking about here the body of the candle being as large okay as the previous red cand

le day okay and we see the stock price close above that high a lot of times you can see that especially if you're seeing a stronger bounce off support if that were to happen we call that CA hold close above high of low day acronym NOW the biggest questions we have to ask ourselves and you always want to remember these questions you want to make it simple okay if we go back and kind of say what are those questions we should ask ourselves identify the most recent red candles now how many of you fe

el pretty strong that you could identify the most recent red candles type in the chat you feel pretty strong on that I I I don't know you personally but I think there's a pretty good chance okay that you could you could see that the second question we want to ask yourself is identify the lowest most recent red candle okay so don't confuse me there but if we take look at this if I were to do that step first question identify the most recent red candles we got one two okay those are the most recen

t second part second question here is identify the lowest most recent the key there okay don't think what you want to think listen to what it says the most recent what color candle the most recent red candle so if I label this as number one we label this as number two which of those days is the lowest most recent red candle answer it's number two okay now the third question you said there's the third question you didn't tell me the third question yet I know I'm getting into it right now I'm comi

ng with you the third question is identify the green candle that closes or trades above that lowest red candle high now notice it says here is it closing what do we mean by closing well closing really means in this case that it's like in the last hour and a half the market that's the way we would Define closing you might say the last hour the last 30 minutes we're going to use the last 90 minutes of the market if we said trades it could be at any time okay and the biggest thing is if we said day

two the the two red candles day one day two we're looking to see is the is the green candle let me point to it are we closing above the high of that lowest most recent red candle which is day number two if it is we label that as Co hold it's a bullish bounce okay now when you think about bullish bounces show me any stock show me any index show us any sector show us any commodity show us any currency whatever you want to look at and we're going to see littered all over the place of that upward T

rend these two bounce setups cold and CH now cold was really kind of labeled by myself and a gentleman named Kelly I just talked to him last week first time in a couple years and C she was created by myself back in 2005 but the thing is how do we actually see these I mean if I'm just getting started with technical analysis how do I see these well the biggest thing what we want to do is understand that we can go to for example the market watch tab let me share these with you okay so the first thi

ng that I think many new investors do is they don't really know what to look at they think everything that they see has an equal weight of importance we would push back on that there's certain things that matter more how do I know what's mattering more we'll tell you okay like the things that we're talking about they're foundational principles looking for the price to be above a shorter term moving average like the 10 looking for the price to be above the 30 period moving average uh and the 10 a

s well you're going to see that we can see on a column heading herl what's called scripts which stocks could be above certain moving averages we don't have to necessarily go one by one by one the script's going to help us see that now what I want to do is just quickly explain to you the 10 is what you think which is if we get a green color background it's saying the price is above the 10day exponential moving average okay the second thing that I think we make a mistake on is we're looking at too

many blasted stocks and we're missing the ones that are like right below like right below us so the investor might say I'm going to make a smaller list that's maybe my problem looking at too much stuff the list that we do on purpose is Dow 30 NASDAQ 100 ASB 100 so we have maybe 200 stocks total total that we really look at okay if you can't find out of those 200 stocks that for example that those are going up then it's going to be challenging to find some other Russell 2000 list or whatever tha

t those are going up so we're looking to see where we have liquidity down NASDAQ 100 S SP 100 that's on purpose that's another foundational concept now the biggest thing is scripts are not guaranteed for accuracy I'm I'm going to send this script to you well send the script to you and then if you like you could actually go ahead and apply that to the platform now today's class is not on scripts but if you said hey I have an interest really to do that scripts not sorry for the capital letters her

e guaranteed for accurac sorry for the spelling too okay now that's for the 10 if you said James I what does the red background mean the red background means that stock Dow that is not above the 10 period moving average let's just verify the scripts are not guaranteed pracy but if I pulled the Dow and I pull up the chart is the Dow above the 10 period moving average the 10 period moving average is the blue color well we can verify and say it's not above the 10 it's below currently but if we went

back to the 30-day moving average column correct that is green that is saying it is above the 30 period moving average will confirm that and we do see that when you take a look at uh that stock uh it is and sorry clicked on that next one Dow it is still above the 30-day moving average which is labeled in Red so this is a fast way to help screen the foundational Point okay now here's the thing I don't think any of us here are going to live to 150 years old okay how many of you would like to go b

ack back and just say gez I wish I would have just like not made it super complicated and stuck with the foundational principles we are all guilty of that including myself sometimes when you learn some some Basics you think you hear things like intermediate that it's better than basic or it's Advanced and that it's better than basic that's not necessarily true okay now the biggest thing is if we go down to you're also going to see that we also have a column labeled as cold that cold anything wit

h a green background could represent stocks that for example are showing that cold setup pattern anything with a black background with a zero that is actually showing something where as of right now it is not showing that bounce setup now what's interesting on this is it's not just on the desktop version you could be on your iPad you could be on your phone and you could actually look at a list of stocks and it's going to show us that same thing or pretty close to it on a mobile device which is k

ind of interesting because I'm not always on the computer okay and the last thing what you're going to notice is the column right there where it says chg close higher Gap okay right there so if we said on the Dow stocks that we see any stocks on the Dow that Gap this morning from what we can see the answer is no okay but that's a column that we would be looking at in the morning to see are there gaps by the way this brings up the question or the point if it gaps is it guaranteed to go up no now

if it gaps in the morning we've all seen those stocks where for example they sometimes do run up and then we look back and say geez I wish that I would have bought at the at the at the morning let me give you a quick example okay ceg Consolation Energy a stock that we talked about yesterday it gaps up in the morning at 189 not like anybody was watching but if they were okay it runs up to about $9 higher intraday like in the first hour and then Fades now for some people they might have traded tha

t or tried to but this is a this is an example where just because it gaps it doesn't guarantee that it's going to run up and stay up it could brought up and there could be some people out there in America who try to get in to make some money I couldn't imagine but wonder if they did okay and they profit took on that little pop now let's kind of circle back to this for just a second and I want you to kind of see this so if you look at this what we see in this case and I'll kind of go over this an

d we're now going to look at examples so remember where we kind of ask ourselves the questions okay what was what was the first question right identify the low identify the most recent red candles okay now there's a quiz on this okay don't think I'm just asking this for nothing identify the most recent red candles one two okay what's the second question identify which of those two is the lowest I'm going to circle that and it's this stay right there is everyone with me I'm going to tell you if y

ou just let this sink into the brain and what I've actually seen is we need to stop being so blasted critical just listen and I'm just saying this to myself just just just listen and actually say how could this potentially help me maybe there's a reason why someone who actually kind of started this about 20 years ago 19' be exact maybe there's a reason why he's saying what he's saying maybe now the second part of this is we get this update okay now that update we're just going to label this as C

H what does CH stand for now that CH for us is going to stand for close higher what might the investor be looking for the very next day Gap well what you're going to notice is the stock closes here and it opens up higher the very next day there's the Gap now what constitutes that Gap just of the prices opening High higher than where it closed from the previous day now how much higher okay now here's the funny thing is we say anything greater than a penny but the thing is you don't really see too

many of those normally if you see a gap it's probably going to be 50 cents a dollar something like that okay if it's two cents higher not much of a gap but and you don't see a ton of examples of that that we've seen okay but that right there is a gap entry now if that stock by the end of the day closes where it does you're going to notice that there's a little circle on that chart what does that Circle represent okay what is it trying to help the investor see I mean they can see the Gap right t

here to right there but that Circle really represents cold okay cold close above the high of the low day and what you're now going to look at is that stock for example closed which is the third question where's the green candle that closes above the high of the low day okay where's the green candle that closes above the high of the lowest red candle day I should say well that's what that Green Dot is showing so here's the deal we're trying to kind of use these Scripts scps to help verify the two

bounce setups that we're looking for and we're getting help from okay a market watch page which helps us look for stocks that have momentum stocks above the 10 looks helps us try to find stocks that are not only above the 10 but above the 30 price above the 10 will be momentum price above the 10 and the 30 would be momentum and Trend you don't have to have a phc to know that okay which is kind of nice and the other part of this is the cold is the bounce setup which probably 2third potentially o

f the time we might see but we're going to see gaps too and some investors like to see gaps and trade those okay now the one thing I want to kind of just do just real quick is let me kind of show you something okay so there's a small company we've never heard of before called General Electric matter of fact you might have been screwing in a recent light bulb and looking at the bottom of it and reading to yourself huh GE General Electric now what you're going to notice is in an upward Trend okay

if that stock is really moving to the upside it's probably going to spend the bulk of the time where the price is above the 10 if it's really trending it's probably going to have the 10 period moving average above the 30 that is I mean that's so important you almost want to write it down in your hand and say look I'm not washing my hands for at least a year okay you think I'm kind of joking with that but it's like that's a foundational point that I think we forget don't forget these Basics okay

ask yourself what stocks if you've made money and paper money Etc in the market what was the foundational common denominators I think we'd have to say the common denominators the 10 was above the 30 the price was above the 10 that's when you probably that's when you probably benefited you might ask yourself the question why don't I do that more why well because we see other things and then we try 52 different other things it's not bad to test things but don't forget the things you learn first ok

ay now what you're going to notice is along this way here you're going to see little dots dots dots all through there dots so what is that kind of show us what that's really showing us is if we get those green dots over time those are like what some investors might call chocolate chip cookies in the upward Trend okay I don't know who who coined that term they're like little chocolate chip cookies okay and those all are signifying bounce entries in that upward Trend now you probably think it's ju

st G now just real quick I'm not trying to tease you okay I would never do something like that for fun never okay ever uh leak and vow for me now what you're going to notice is if we look at a stock like a AIG notice that we see those little green dots also known as chocolate chip cookies that we'll call them is there along the way along the way now some investors might say well I already missed it it's gone too high but we know that if you make a high there's higher lows what is proof of higher

lows answer the whole dots getting higher and what you're going to see is if I zoom in so you can really see it is there's one there's another one there's another one there's another one there's another one let me ask you something do you think you could put two different moving averages on the chart do you think you could put these little Co dots on the chart and kind of help see those two main types of setups okay now I want to kind of state something to you okay if you actually said hey can

I get this chart set up could we share that you know etc etc how do you put that on okay now the biggest thing is if you go to that chart that I sent you how do you put that on we're going to go to the very top right click on the gear open shared item okay very top right click on that gear okay open shared item and I'm just going to copy and paste what I sent in the chat if I do that and I now say let's just preview this we could also name it by what we want by importing it Etc okay and now we h

ave another little chart so that is not too bad go to the top right open shared item if you can copy and paste I mean we got we got a chance here okay and that's going to give us really the chart now I know this class normally goes about 30 minutes my normal classes go 47 minutes and 59 seconds okay so I'm not going to take this to 4759 but I want to kind of look and see if there's any questions okay so if if we were all getting started knowing what we know now what is maybe something and lookin

g back that we think we maybe drifted away from that the investor might say gez I wish I would have focused on these two things now these two things for us in this class would be geez not forgetting the importance of these okay if you look at when the investor really did well it comes down to one main thing the price was above the 10day exponential moving average you could let you could tell show me any chart we'll pull it up and it will pretty much come down to prices above the 10 so you might

try to continue to expose that how do I find Trends wouldn't be do hard if they're out there because we could use the 10 and the 30 as a way as a proxy for momentum and Trend and the second to last part of this is so this is really number one just finding momentum and Trends the end and then with that finding those bounce setups okay now let's go to questions here okay now the other thing is also if you actually say hey where could I actually see those also is there anywhere else you could see t

hose okay I have it I have a uh X page so does Lee bow Lee if you could put your uh X page on there and what you're going to notice is if you scroll down let me just kind of reference any of these other scripts uh that we actually talked about and I'm going to kind of pull these up as well now just want to reference these so what you're going to notice is if you wanted to kind of put that so if you're using the old website so are these scripts okay so what you're going to notice is 10day Ema 30-

day SMA okay and what you're going to notice is it's right there there's the script for it there's the script for it this script was written from the old old platform okay now if you also said for example how would I see those green dots on my chart uh potential entry setups on chart go hold Green Dot okay and there's the script for that right there so for anyone that maybe says I'm using the old platform right now these scripts are coming from the old platform okay now zier says which stocks do

you follow well if you actually look at for example our examples 95% is of all the examples that we look at in any class that we teach are coming from the Dow 30 okay that's what we have on the left hand side coming from the NASDAQ 100 that's why we have it on the left- hand side and coming from the S&P 100 probably about 95% of all the examples that we look at are coming from these three list now why did you only say 200 200 stocks because some of the stocks on the NASDAQ could be traded on th

e on the Dow some of the stocks in the S&P 100 or some of the stocks in the Dow could be in the S&P 100 Etc so the two other stocks in total that we really look for are coming from those three list okay now I want to kind of we got to close this up because I know Cameron normally runs this class to 30 minutes and so let me kind of give you some stocks that an investor might look at as an example so one of the stocks I want you to kind of look at is for an example is d W DC okay I also want you t

o look at a stock for example like C okay look at the most recent Trends can you identify the Gap entry and the close above the high the low day a CI which is Sigma okay another one would be AMD which is a recent pullback and that is not one above the 10day or 30day moving average yet but could that try to bounce to the up side keep an eye Goldman Sachs okay notice that's a setup for CH that's closing higher but we're not above the high of the lowest most recent red candle not yet could that one

Gap tomorrow where did GS come from answer Dow 30 it's the second one in the list okay and the last one is Netflix okay if we look at Netflix can we see along the way little green dots showing proof of higher lows if these dots are actually getting higher that is showing evidence of technical evidence of higher lows if we're making higher lows are we in the upward trend is the price staying above the moving average which moving average is it using and if that stock is sitting itself on that 10d

ay moving average that is the definition of trend that is the definition of momentum so today's class is on coming home coming home to some foundational Concepts that might be oversighted by other things that maybe someone thinks they more important so if I brought up certain indicators that does not overlay more importance than these foundational Concepts okay you show us any chart that was going to the upside we'll go back to where's the price in relationship to the moving averages that probab

ly tells us something and I'll if we saw the upward Trend can we identify the two main entry setups okay I'm out of my time here today but I want to also kind of make sure that uh you recognize that uh we have Lee B with us Lee B for example he will be teaching uh you're going to see that Lee B let me actually go back to tomorrow he's going to be teaching the class on market and sector analysis that's tomorrow and then also you're going to see that uh lee B will also be teaching uh get toos schw

ab.com on Thursday Friday is Good Friday the Good Friday okay and also he normally teaches the advanced concept Advanced technical analysis on Friday so check that out this has been recorded I'm trying to actually keep more to the time frame that Cameron does because that's what you're used to and uh if you like to come to a class that was a uh maybe a little longer that's my normal classes that I teach a little fun there so uh anyway this is yeah so with that said thank you so much for your com

ments I gave you some stocks to look at to practice your homework assignment is to practice seeing chg and cold practice putting that on near market watch on the columns put the cold on the chart this class has been recorded Cameron should be back next week and uh with that said thank you so much for your comments and your participation remember with what we discussed here today it was done for example illustrative purposes only remember that all investing involves risk again I want to thank Lee

and all of you for being here today and with that said this class has been on getting started with technical analysis things that we might overlook or maybe kind of forgot we want to come back home to some of these key points and uh practices and principles with that said I wish you a great day stay tuned for our next webcast coming up right at the top of the hour from Brent Moors thank you so much take care bye-bye