 Hi everyone, Lee Lowell here from smartoptionseller.com. Today is Saturday, October 2nd, 2021. Welcome to another edition of our Saturday synopsis, YouTube videos. What do we do here? We look at charts, we look at indexes, we look at individual stocks. I'm here to show you what I see in the markets and try to help you become a better and smarter trader by showing you what I've learned over the last 30 years that I've been in the business. I'm a technical analyst. That means I look at charts. That's all I do. I look at charts all day long. And that's how I base my trades. I look at the charts, see where they've been and look at the patterns and the moving averages and technical indicators to see where the stock might be heading next. And that's how I base all of my trades. And for those of you who are new to this, what we do here at the smartoptionseller is that we are put option sellers, we sell put option spreads. So those are technically neutral to bullishly directed types of trades. So we're always looking for stocks that are either neutral or I should say moving sideways and are ready to move up bullishly. And so we look for those kinds of stocks. We look at the patterns, moving averages, technical indicators to help us understand where a stock or indexes next move might be. So let's just jump right in as we always do every Saturday. And we look at the S&P 500 index first because that's what I feel is the broadest measure of the market as a whole. And typically we focus on the SPY which is the exchange traded fund for the S&P 500 trades just like a stock, you can buy or sell all day long and it tracks the S&P 500 index itself. So what do we do? Well, first we open up the chart and I wanna show you what I use. I like to give everyone an idea of the things that I look at for any newcomers here. This is what we do. I look at daily charts to start. I'm a longer-term trader, okay? So a longer-term trader, you wanna look at the daily trend of the market. If you're a hyperactive, intraday trader, you might look at a chart of one-minute movements. Now, all these bars that you see on the chart are, this is one minute's worth of movement of a stock. That's very small, quick time frames that intraday day traders, hyperactive traders try to gauge where a stock might be moving based on one-minute charts. We don't really do that, that's not our thing. So we default to the daily charts where each one of these bars is one day's worth of trading so we can see how the stock moves over the long run. Now, what we've come to the conclusion is over the long haul, decades and decades, the stock market tends to move up over time because that's how it works. Companies within the indexes, within the S&P 500, the Dow Jones and NASDAQ composite, these are companies that create products that people buy that have rising earnings quarter after quarter. So obviously the stock prices are gonna follow those earnings higher over time, okay? Now we can back out to a long-term chart of the, this is the S&P 500, going back to 1992, 93 or so. And you can see over time, we go up, had some sideways actions for a number of years, the pandemic in 2008, 2009. That's when the Fed, the US Federal Reserve started stepping central banks around the world started to step in lower to interest rates and started pumping trillions of dollars into the economies all around the world. And obviously, because of part of that, not the only reason why, but part of that is the reason why the stock market has been going up since 2009. Now, obviously, if companies are profitable, their earnings are increasing quarter after quarter, yes. The stock prices will go up as well. The reason why we've had this massive move up or part of the reason why, I should say, it's not the only reason why is because of the central banks around the world that have sort of backstopped the financial system and know that they're going to be there in times of turmoil, so stocks have gone up. And the other reason why stocks have gone up is because it's the only place where you can get any kind of return on your money, right? Bonds don't pay that much, certificates of deposit don't pay that much. You just can't get that kind of return. Bank accounts just don't get that kind of return anymore compared to the stock market. The S&P 500 in the long run has returned seven to 10% a year. You can't get anything close to that on a consistent basis from any fixed income kind of security. So the stock market's where it's been at. Real estate, yes, real estate has been a good wealth generator for a lot of people, but real estate is very illiquid. You can't get in and out of a real estate transaction the way you can with stocks. Gold, not the kind of returns that you can get with stock market. Gold investors, you've got a lot of gold bugs out there, but gold doesn't really go anywhere. So stocks are where it's at. So this is the reason why the market has been going up. It's really the only game in town. You've got the central banks around the world pumping millions of dollars into the system and you have profitable companies. So that's just a recipe for the stock market to go up. So over time, I'm very bullish and that's where I keep my money in the long run, in the stock market. On a shorter term basis, we're talking, what type of trader are you? Are you a day trader or a longer term trader? Our timeframe typically defaults to one to three months out in time when we sell put options, we sell put option spreads. That's the expiration duration that we typically use one to three months out in time. That's still pretty short term. Prices can be very erratic in that short timeframe, but we think by looking at the charts, we can kind of get a gauge over the next one to three months where stock might be headed and might be headed, not be headed, that's not a good thing, but where stocks are going to be heading. And so we look at the charts and we try to gauge what we can glean from our moving averages, technical indicators and all that thing. So when we're looking for bullish trades, obviously we wanna see stocks that are moving upwards from the bottom left to top right. That means the stock is in a nice uptrend and if there's a pullback in the stock that we think it's a quality company, then we can jump in when it has a pullback, hoping for the next leg higher after that. That'll help us make profitable trades even quicker. So what do we do? We have our daily bar chart and some people look at candlesticks as another way of looking at charts. If I change this to candlesticks, you can see how things change. Now, typically people will have updates as a green candle and a red color as a down day on candlesticks. I keep everything just one color. Now I go back to the bar chart now. I mean, it's called a bar chart, which is a daily open, high, low, closed type of chart. So there's four things to notice on a chart, a bar chart. You get the vertical line on the left. There's a little dash mark on the left that tells you where the stock opened for the day, little dash mark on the right that tells you where it closed for the day. And the bottom of the bar is the low of the day and the top of the bar is the high of the day, okay? So we watch over time to see where a stock or index is moving and on my charts, I have three moving averages, a 20 simple day, a 50 simple day and a 200 day simple moving average. There's exponential and they're simple. I use the simple, which what you do is for a 20 day moving average, it averages out the last closing prices of the last 20 days worth of trading and it gives it an average price and this is where you have the moving line. This is the blue moving average line. Same thing with the 50 day. You take 50 days worth of trading and each has an equal amount in the average. Now an exponential moving average gives more weight to the more current closing prices, okay? I deem each day's worth of action equal as the next. I don't give preference to the more recent price action because I just, I think every day is important. So that's why I use simple moving averages. And down here, I have the RSI indicator, which is an overbought, oversold indicator. It's a 14 day indicator, 14 day look back period and it goes from zero to 100, okay? And the default is the 25 and 75 level. I moved mine out to the 80 level and 20 level to really gauge whether a stock index is overbought or oversold, okay? You can move it to any range you want if you have a charting platform. I use the 80, 20 level, the default is 25, 75. And so the RSI will fluctuate in that range, tell you whether the stock's just moving along nicely. That'll be around the 50 level. You can see it kind of fluctuates around the 50 level, moves up, moves down. And then every once in a while, we'll get into these overbought areas. Right here, this was last August, 2020, where it tells you that, hey, the stock's getting a little heated up, okay? It made this quick move up. And so it got a little overbought. And now it's not telling you, we're gonna have a turnaround right then and there. It's not telling you we're gonna have a bear market right then and there, just saying, hey, keep an eye on things. It's getting a little overheated. So what we saw here was hit the high and then we did have a pullback towards the 50% range. And then it started to move along and started to go up again. And back here, during the pandemic, we had the oversold area. This was before it actually made the lows. So it was telling us ahead of time, hey, keep an eye out. This thing could be really getting oversold. And it actually sold off a lot more, the price action. And you can see as the prices were coming down, the RSI wasn't making more new lows. So the lows on the RSI was hit back way up here. And then these lows were it. So the reason why some people may have been buying here is because the RSI was not getting any more oversold. So that can tell you this is what's called divergence. And the price goes down, but the RSI starts to move up. That's called divergence. And that's saying, hey, I think the selling's coming to an end. You got some buyers starting to step in and look what happened. You had this V shape bounce. And over here got a little overheated, overbought some selling to take it off the highs. And then it just was in the middle of the range and started to go up again. So we use the RSI more of a, just a warning sign to let us know, hey, things are a little overbought or oversold. But most of the time, it's just kind of moving along the way it should, going up in a nice, slow up trend. So we're looking for stocks and indexes that are moving up. I mean, if you're invested in the market, you want the market to move up. So what are we seeing? Every week on Saturdays, I typically take a shorter-term look to see where we think the market is going next. Now, last Friday is when, let me blow this up a little bit more. So here we were last Friday. I'll dial it back. So this is where we finished last Friday. We were sitting right on the moving average, the 50-day moving average. Typically, these are widely followed moving averages, 20, 50, and 200-day. And the more people that you have looking at these things, the more the patterns repeat themselves, because human nature is the same over time. And if everyone's watching the same things, everything tends to repeat. So typically, we can pull it back. You can see that the S&P 500 would bounce off of the 20-day or 50-day as it's moving up. If it's going down to the 50-day, there's a good chance it's going to bounce, right? So this is where we were last Friday. Let me pull it back again. So last Friday, we ended right here, and it was sitting right, it had to sell off, it had the nice bounce back, bounce right back to the 50-day moving average. And I said last Saturday, you can go back and watch the videos. It was a great thing that it moved all the way back to the 50-day moving average line, but it took a lot of energy to do that. It was a good thing that we got back here. My thoughts were that the market was going to kind of consolidate here. It spent all that energy moving back up. It's got to consolidate a little bit. I thought maybe it would pull back a little bit more and then move its way up again. So what did we see this week? Well, we had the gap open on Monday. Here's the open air pocket between Friday's close and Monday's open. And with this whole week, just had another swoosh downwards, okay? That's something we, you know, we don't really want to see that if we're bullish. We don't want to see a big move down like that. But today, yesterday, Friday, October 1st, had this long day down. But the good thing is that it rallied back throughout the day. You can see the little dash mark over here. So we regained all this stuff that it sold off during the day and closed kind of near the highs. Now, if we look back at a one-minute chart of today's trading of, I'm sorry, yesterday's trading, you can see here, let's do a five-minute chart and make a little bit easier. So this is where we opened trading yesterday, Friday, October 1st. 9.30 a.m. Eastern time was right around here. So sold off within the first half hour of trading and then spent from 10 a.m. Eastern all the way through the rest of the day, found its way higher. And close, here's the highs of the day. So closed a little off the highs. Now, if we go back to the daily chart, you can see that here's the long bar today, low here and rallied all the way back. Here's the close right on this little dash mark there. So that's a good sign. Typically, we don't like to see the market trade below both moving averages 20 day and 50 day for this long. Maybe getting a little oversold here. What I do wanna point out is you can see how we had the down move, this little down move, but the RSI has a little bit of upwards movement to it between this last sell off and yesterday's sell off. You can see the RSI didn't make another new low. Price actually made a new low, but the RSI did not. So that's a little divergence here. So that gives me some hope that this selling may be getting close to an end here. Okay, but we have to watch the 20 day has crossed down below the 50 day moving average. That doesn't always concern me so much because that happens before and it doesn't mean that there's a lot more selling involved. It just means that the moving averages are trying to catch up to the price action. So I'm hoping that we're getting this selling out of the system. The RSI didn't make a new low, which is a good thing. We have this divergence. So hopefully we can probably maybe get some rounded bottom, kind of get some consolidation here and then start to move higher again. The 200 day moving average is still moving up. The 50 day is still moving up. It's just this 20 day that's kind of turned down a little bit. So let's take a look at the NASDAQ represented by the triple Q's, QQQ, same thing, had the move down this week has fallen below both moving averages of 20 days not crossed below the 50 day, which is good. There is no divergence here. So the RSI is still moving down while the price action moves down. I'd like to see this RSI start to move up a little bit more. It's getting a little, little oversold not completely oversold, but it's certainly moving down. I'd like to see the selling come to an end here. Next week, possibly could be a little more residual selling off of this week. And, but what I would like to see, maybe it's getting a little tired here. Selling is getting a little tired. Maybe the bottom feeders will come out. But, you know, as of last Friday, we were here closed well above the 50 day moving average. This is where we were last Friday. So it's very hopeful here that the NASDAQ was going to help power everything higher for the next move had other plans start to move down. Nothing is guaranteed. All we can do is make educated guesses here. But we do like that the moving averages are still sort of sloping upwards. That means it could catch its breath here and start to move higher. Let's take a quick look at the Dow. Dow Jones, if my charts will cooperate with me. Let's look at the Dow Jones index. Open this up here. The Dow also had a, had a, you know, move down as well. Didn't take out the low from the prior sell off. So this RSI is moving up, but the price action didn't hit a new low over the last sell off either. So it's getting close to the 200 day moving average. The Dow's range has been a little bit tighter than the NASDAQ of the S&P 500. Let's hope maybe we can have a double bottom here. Double bottom is another pattern that typically can call the end of the selling. The double bottom is a good thing. So we want to see the market move back up. So I think what's happening, what's going to happen is after this bout of selling, maybe we'll get some consolidation here, maybe a little bit more selling, possibly touch the 200 day and then start to move higher. You have to remember, companies that make up these indexes are real companies, real products, selling, earning real money and their earnings are increasing over time. That's a good thing. That's what helps drive a stock market higher. Yes, we have COVID still out there. We have the US Federal Reserve saying that they're going to start pulling back on their bond buying activities, inflation starting to creep in. So you have some news stories, some narratives out there that are working against the stock market right now, but those news stories have been around forever. People are always complaining about inflation, complaining about the Federal Reserve, complaining about this, complaining about that. But look what the stock market has done over time. Eventually the stock market goes up. So whatever the narrative happens to be right now, it will pass, it will pass and eventually the market will go up again. Now, if you're trading short term, it's a little bit harder for you to kind of gauge where things are and how to handle it. So if you're trading shorter term, you have to be more aware of these short market moves and you have to make sure you have your stops in place because you don't want to give away a lot of your money. So if you're playing shorter term, days, weeks, you need to have your stops. So as far as the indexes themselves go, there was a little bit of damage this week. Markets came off. So I'm hoping that the selling will slow down. We'll start to find some bottoming action, but there could be more selling next week, but it looks like it could be starting to slow down. Let's take a look at some individual stocks now as we typically do every week. Let's take a look at, we always look at Apple. Let's pull up Apple. One of the all-time favorites. Apple, just like the indexes, had to move down this week. So we draw these patterns. What you can do is there's patterns that typically play out over and over again. You have these W patterns. You have these congestion patterns. You have the channel. So Apple was in this uptrending channel here has fallen below, has fallen below the moving averages. So the next stop for the good thing about Apple is that it closed on the high of today's bar, which is a good sign. We like to see that had a big move down, but rallied all the way back. So the selling is probably starting to get a little slower here. As you can see, the price action is moving down. The RSI itself is flatlining. That means the selling is probably slowing down, coming to an end. I really don't think Apple will come down to the 200-day moving averages, which is right around $135 a share. That'd be another pretty good sell-off. Could happen. I never want to say never. It could happen, but with the RSI not making a new low, with this new low here, we'll probably see some sideways action, maybe a little bit of drip selling, and then hopefully start to move in a more rounded bottom sideways action, storing up energy to go to the upside. Let's take a look at Microsoft. Microsoft finally was doing real well this week and knocked it down, but in the whole scheme of things, here's the all-time highs for Microsoft, and it's just down here. I mean, you can't complain about the move, all this move. If you've been in Microsoft, you're a pretty happy camper. If you're a short-term trader and you bought up here, okay, well now you're looking at a little bit of a loss. So it depends on your timeframe. Depends how long you've been in the trade. Microsoft's still a great company, still a great stock, just having a pullback. Where will a pullback end? That's anyone's guess. All we can do is make an educated guess here. I don't think it'll come all the way down to the 200-day moving average, but it looks like it's kind of floating here. The RSI's still moving down, so there could be some more selling in Microsoft. You just never know. In the long run, I'm still bullish on this whole sector. I think Microsoft's a great company in the long term. Eventually, it's going to keep moving up, but where does that bottom occur? Anyone's guess at this point, but I think the selling will slow down. Intel has been sort of in this down move as well, but here's what I like to see about Intel. You can see the price action's been moving lower, but you can see the RSI has been flatlining, actually been moving up. If you draw from here, like this section here, you can see it's sort of flatlined, and that means that the selling should be coming to an end. It's been moving sideways. Hopefully it can get on its groove and start to move higher. Let's see what other stocks we, let's look at Tesla. Tesla is such a great stock to sell put options on. I sold some put options this week for expiration, and I sold some more put options yesterday on Friday, October 1st for next Friday's expiration, way, way out of the money. Tesla, if you're a smart put option seller, Tesla is a great company to sell put options on. There's not advice here, I'm just telling you, this is what I'm seeing in the market. You can sell Tesla put options, hundreds of dollars out of the money, and get paid a decent amount. Just be careful what you're doing. So Tesla's been in this nice channel here. Even last Friday, it was hitting on top of the channel. I thought maybe it would pull back. This is where we were last Friday, right at here, closed on the high last Friday, coming along the top of the channel. I thought, all right, well, maybe it'll pull back towards the bottom of the channel if we have a down week. Well, we had a down week, but Tesla's still hanging up near the highs. Popped above it, came back into the channel, so hugging along the 20 day moving average. So Tesla's actually been a strong stock this week, and I think if the market, the general market indexes are strong next week. Tesla, this could be a little bit of a bull flag here. Bull flag is, let me draw this, this is another pattern, so you have what's called the flagpole. Let me do that again. You got the flagpole here, start over. You got a flagpole here, long line. Come on, help me out here. You got the flagpole, and I'll darken this up so you can see what it looks like. Some people call it a pennant. You've got the flagpole, and then you have this little price action like this that ends up making it look like a flag. Just give me a second while I do some manual labor here. It's not what I wanted. This is the flag right here. I want this one. Edit this, color, width, okay? And then this one right here, we're gonna color this one up, and I'll show you the flag, okay? So that doesn't look so good. Anyway, you have this long pole and the pennant. Typically a bull flag will pop up out of the flag pattern and move higher. So we may be seeing that in Tesla right now. So next week could be strong, but if the indexes come off, Tesla's could start to move down towards the 20 day, 50 day, or the bottom of the channel. Most people love Tesla, so most likely it could go up for next week. What other stocks are we looking at? Disney, 50 year anniversary of Disney World in Orlando, Florida, yesterday, October 1st. 50 years, but was there an anniversary in the stock? Well, the stock was up almost over $1.7 a share. $7 a share yesterday was a good day, but it's in this channel here. So Disney's still trying to figure out where it wants to go, sideways action. Hopefully it'll get on its groove and start to move higher. Let's see what other stocks we have. Nike, Nike has fallen, still a great company. Had the earnings pop here, went to all time new highs, came down to this channel, has now sitting right on the 200 day moving average, getting oversold on the RSI indicator. Possible buying opportunity here. This is the grand daddy support, 200 day moving average, oversold ish RSI, could be a place to potentially get long. May want to nibble, if you want to get long nibble, that means buying a couple shares and or selling deep out of the money put options if that's your thing. Nike's giving somebody an opportunity to get long. If you wanted to get long here, you missed the air pocket. Well, here's your pullback. What are you gonna do? Sitting on support, little oversold here. Could be a potential nibble buy area. I like that for Nike. Let's see what else we have in our charts here. Walmart, Walmart took a dive today. I nibbled a little bit on Walmart too. Look at the RSI. Well, in the oversold territory, why is Walmart selling up? I don't really know. Could be the supply chain issue for upcoming holiday shopping. Maybe Walmart's not gonna have as much inventory as before. I don't know, there's lots of narratives out there. But I know when Walmart pulls back a decent amount like this, I'm starting to nibble. I buy a few shares here, few shares here and there. Oversold, I like Walmart for the long run. And so that's what I'm doing. Walmart looking oversold. Is it gonna bounce all the way back to new highs in a matter of days? Probably not. It has to digest this big down move. Does that by moving sideways, maybe even a little lower before it starts to find its bottom. That's how stocks find a bottom after a big move like this. They have to digest, move a little sideways, round it out bottom, and then eventually move back higher. But if you're a Walmart fan, could be a buying opportunity for you right there. What else, how much time we got? We have about 28 minutes in here. Netflix still looking strong. Netflix has finally gotten out above this long channel. It's finding support on the 20-day moving average. Netflix looks strong, even if there's a pullback. Here's made all-time new highs this week. So Netflix looking good. Let me make sure that is all-time new highs. Pulled back to the monthly, yep, all-time new highs. Netflix looking strong above the channel. This has now become support. If it pulls back, it'll probably find support right at this line here. What else do we have? What other stocks do we have? Oracle, we like. Oracle, we've still put options on here at the SmartOptions. Oracle still looks pretty strong, hugging along the 20-day and 50-day moving average. They're right on top of each other. Cisco systems pulling back. Potential put sell area here. I've been thinking about it, but I'm not sure if it's done selling off yet. 200-day moving up. YRSI starting to maybe find a bottom here. Not sure if I'm ready to pull the trigger on Cisco yet. Let's see what other stocks we have in the hopper. Now, healthcare has been getting beat up pretty good this week, except for Merck. Merck came out yesterday. Keep saying today, yesterday. They came out with a potential COVID pill that you can take as a pill to vaccinate you against COVID. And look what happened. Stock jumped. Amazing here. And I thought the XLV, which is the healthcare ETF was gonna go up as well, but you have all the other stocks. Johnson and Johnson still kinda looking weak here. Maybe getting down to the oversold area. Johnson and Johnson. Bristol Myers, which we've sold put options as well, taking a stab here. I like how it got prices coming down, oversold. Here's the divergence. RSI moving up while price action, kind of finding it's footing moving down a little. I like that action here. So selling out of the money, put options on Bristol Myers is what we've done. Pfizer has been moving down. So the pharmaceuticals have been moving down. XLV is the ETF. We were in this in our put spread. We had to get out. The move was a little bit too much for us. We hit our stop loss. So we had to get out. It's still moving down. RSI still moving down. There could be more selling involved. Eventually, of course, it'll probably go higher. But for now, we're mechanical here. When it tells us it's time to get out, we get out. But I do like the healthcare stocks in the long run because healthcare is a big deal. We need to keep people healthy. They're putting out good drugs. And so healthcare is here to stay. Unfortunately, sometimes the moves are a little bit too big and you got to get out. AMD is another favorite of ours. It's been pulling back. It's got this support here. Looks like right around $100 a share. It's bounced a couple of times. And so it's trying to find its footing. I'm not gonna make a call on AMD right here. We have a position, put selling position, getting ready to take profits on that because we sold put options way out of the money down here. So that's gonna expire soon. We'll have some profits on that. And Brokter and Gamble, let me see. Eli Lilly was another healthcare stock still kind of moving down. What else? Let's go down our list here. Verizon, I still like Verizon, but it's not showing me anything. It's still in this downtrend. So let's take a look at some downtrending stocks. So Clorox is another I brought up many times. How do you tell when a stock's done moving from uptrend to downtrend? It's the physics example. I always give a stock moves just like physics stays in one motion until something comes along and moves it in another direction. Clorox still moving down, still hugging along this downtrending channel, even though it looked like it was getting ready to break out, came back down. And now it's got this sideways action. Maybe there's a floor here. But you don't wanna get bullish on a stock that has a downtrending chart like this because you're just gonna be fighting it and you're gonna get frustrated. So you don't wanna buy until it's starting to tell you it's starting to move back up. So we're only looking at for bullish stocks here. And I think that'll about do it for today or around 33 minutes. All right, so that's all for today. The indexes themselves, there could be a little more residual selling next week. They're trying to find a bottom, wanna see it turn around, see the selling slow down, could be more selling, but we wanna see that bottoming action soon. Let's quickly go to our website smartoptionseller.com. We are big put sellers, that's what we do. If you don't know anything about put selling, download our free put selling basics guide. Go to our website, put in your name, email address, we'll send you a free copy, okay. Services tab right here tells you what we offer, two newsletters and our coaching, that's what we do. And that is pretty much it for me today. I hope it's been helpful. I know these videos get long. Each week I say to myself, I wanna keep these things shorter, but I just keep going on and on and on. Anyway, I hope it's been helpful. Give me a thumbs up. If you feel it's been quality education, don't forget to subscribe, hit that red subscribe button, send me an email, leave me a comment, I'd love to hear from you. All right, that's all for me today. Hope everyone has a great weekend and a great trading week ahead. This is Lee Lowell signing off.