 Hey everybody, Lee Lowell here, smartoptionseller.com. Good morning. It's Saturday, February 27, 2021. Welcome to another edition of the Saturday Synopsis. I actually did something a little different today. I typically go over an option trading strategy and then I do the Saturday Synopsis where we look at the charts. Well, I filmed the option strategy yesterday, Friday, February 26. It's actually about how to sell option credit spreads using interactive brokers. So that's another video I have that I already have on YouTube here. So after this video, if you're looking for the strategy session, take a look back into the archives here of the YouTube and you will find the video that I actually posted this morning, but I filmed last night. So if you're looking for that, it's there. Just go to find it. But so today in this video, we're just going to do the Saturday Synopsis where we take a look at the charts, look at the indexes, some individual stocks, see what happened this week and what we can see possibly going forward for next week. So let's jump right in. We always open up to the SPY Exchange Traded Fund for the S&P 500. It gives us the best overall view of the market as a whole. So we had some good volatility this week in the market for sure. You know, we had a big down day on Tuesday, and then Wednesday was basically an up day and then Thursday and Friday down days as well. So we had some decent volatility up and down. Let me open this up a little bit so we can really see what's going on here. So this is the SPY. So here we go. We got this week's worth of trading right here. So you can see the ranges widen out a little bit. You know, here, this was one week's worth of trading, very small range two weeks ago. And then this was this week's trading. So obviously we'll have some weeks where the ranges are very small and then some weeks where the ranges are very large. Typically, when the ranges are large, that's when we get down moves. Okay, I've always talked about as the stock market goes up, it takes the stairs up, it's a slow stair step higher and then the elevator down big quick moves when we have the down move. So you can see smooth move up big down, smooth up big down. And then we have this, you know, smooth up and then a big down. So that's what happens. The selling comes fast and furious and it happens all in one chunk in a day or two. And it scares people and they don't like it. We just like to keep this slow move higher. But this is a normal functioning market. You know, unfortunately, the down moves come come big and strong and it's scary. I don't like that either. But you know, that's just how the market works. So you can't let it, you know, completely freak you out, scare you and say, Oh, my God, this is it. That's the end. And here's the next bear market coming. These are normal ebbs and flows in the market. So don't be too overly concerned when we have pullbacks like this, because that's just how the market works, right? The market goes up some and then it has to give back some in and out. People are buying and selling you got hundreds of millions of people around the world trading stocks every single day. And everyone has a different opinion on things. And they're influenced by the news are influenced by what's happening around the world, they're influenced by the central banks around the world, our interest rates going up, are they going down? So there's lots of information, the coronavirus and it influences people's perception of what's going to affect or how it's going to affect stock prices. And everyone plays in the same market. So we get up days and down days. And when you have a continual move without a big move down, we have a continual move up, eventually, you're going to get a sell off, people are locking in profits, people are just selling because they don't like what's happening out there, or you know, they need to pay their bills. So they're selling for lots of different reasons. It doesn't mean that it's selling because it's the end of the world. And we're going to have another crash. It's just a normal ebbs and flows. So what we saw in the in the S&P 500, you know, we had a nice move higher, you know, after this pullback a couple weeks ago, we got back on the horse and started going up again. And then we had another pullback. But as you can see, and I've talked about this so many times, when we have a good up trending market, we've got the blue 20 day and the red 50 day. Typically, a stock or index that is in a nice trend, either upwards or downwards, will typically fall back to the 20 day or 50 day, and then find the support in the case of an uptrend, it'll find the support and bounce and move up again. If the stock's in a downtrend, and it all of a sudden it jumps higher, it'll probably hit resistance at the 20 day or the 50 day, I'll show you a chart or chart or two on how that works. So here's what I'm thinking that here's the S&P 500 came down, went through the 20 day and landed right on the 50 day at the end of yesterday's trading Friday, February 26, 2021. So what we want to see as long as we want this uptrend to continue, we need the market to bounce here, we need the S&P 500 to bounce next week and start its track higher again. Now don't be concerned if the market closes a day or two below the 50 day moving average, because that will happen. You know, my rule is like, you know, I like to see no more than three solid days below, you know, the 50 day moving average before I really get concerned. So this close right on the 50 day, so it I'm hoping for support to hold and see it move back higher next week. So let's take a look at the NASDAQ because that one moved pretty good. That was we had some really good volatility in the NASDAQ stocks this week. And these are the tech stocks, you know, Apple, Amazon, Google, Tesla stocks like that. And we'll look at those individual charts as well. So the NASDAQ definitely has popped down below the 50 day moving average right here. So we have you can see these bars. Let me open this up a little more. You can see each one of these bars is one day is worth trading. We're looking at a daily chart here. So the NASDAQ definitely fell through the 50 day had some down up down movements, good volatility. It actually ended higher for the day you can see we're in the green here up 72 points. So these were this is the NASDAQ composite. And so what we want to see is that we want to see this area hold and we want to see it move back up again. There's nothing telling me that this uptrend is in jeopardy. Now people will say, Well, you know, interest rates started going up this week. And we'll take a look at the interest rate chart. Actually, let's look at that right now. Let's see, we've got the the 10 year note, which is basically a proxy for mortgage loan rates. You got auto loan rates. So the 10 year this is the 10 year interest rate note, the US government 10 rate 10 year rate bonds. And you can see that we had a pretty good spike in the interest rate this week. Let's go out to the monthly chart. So you can really get a view of how interest rates has trended over time. Obviously, big downtrend in interest rates hit an all time low here. This was March 2020 last year, right at the beginning of the pandemic, we hit lows in interest rate. And then the ensuing months, we've just started to tick back higher. So interest rates are going up. So people will say, when interest rates go up, stock market goes down. Why is that? Well, people want to put their money back into more guaranteed type of payments and bonds are guaranteed types of investments, you know, you buy a bond and you get the interest payments and you get your money back if you hold for the full maturity. So people will take money out of stocks and invest in in bonds and T bills because it's guaranteed. But the rates are still super cheap. You're I mean, you're barely getting over a point and that's for holding for 10 years. Before you get the full if you're going to hold for 10 years. So but people will say, well, that's the same as the stock dividend yield on the S&P 500. Well, that's fine. But stocks still have appreciation if they go up in price. So you know, that's just one narrative of why stocks came off at the end of this week because interest rates are going up. But I mean, interest rates have been going down since, you know, the early 1980s. And now if you look at the stock market, let's pull that back up. The stock market's been going up since, you know, the early 1980s had some some flatlining here. But stocks are going to go up over time. It's just that's how it is businesses make products that people want to buy and people spend money and buy those products and the company's earnings go up. That's why their stock price goes up. Yes, in a very short term, it could be influenced by lots of different things that could be influenced by interest rates, wars, pandemics, things like that. But you can't stop the overall trajectory of the stock market, just because interest rates are going up. So in the short term, yes, this is this is something that could happen on a day to day basis, anything could happen. And it could be very volatile. But in the long run, if you're holding on for years, the stock market will go up over time. So yes, if you want to reason why the stock market came off the last two days, okay, maybe it was for interest rates, but it's not going to deter me for my long term projection of where stocks are going. So here back to the NASDAQ came down below the 50 day, I'm hoping that it's going to continue its move higher next week. Let's take a look at the Dow Jones industrial average. Dow Jones was pretty strong too. And then it then it got hit on Friday. So here's the Dow Jones. Let me open this up. Daily chart for the Dow. 20 day 50 day moving average came down close the day Friday yesterday, just above the 50 day moving average. So the Dow made all time new highs right here Thursday Wednesday and Thursday this week all time new highs. And then it got hit along with everything else still in a nice uptrend. You know, and so here's the 50 day, you can see how it came down below the 50 day for a couple days here, and then got back on it and started to move up again. So we could see the same pattern repeat. Once again, I'm pretty bullish on the market. You know, the pandemic is certainly still out there. Vaccines are rolling out around the world. That means that people are going to get out again, they're going to go to restaurants, they're going to start traveling, they're going to start spending money, they're going to be buying products. That's what keeps stocks on the up move. earnings earnings earnings companies are selling their products and their earnings are going up. Their stock price will go up the at the you know, six months from now when hopefully everyone's vaccinated, and we're we're all free to go out again and spend money. That's what's going to happen and it's going to drive stock prices higher on a day to day basis from here till next week, anything could happen. But I'm I know for the long term stocks will go up again. So that's the Dow, S&P 500 and Nasdaq all coming down to the 50 day, hoping that we will we'll get back on track and move up again. Let's take a look at some individual stocks to see what happened to them this week. I think we all know things got hit. Let's take a look at some areas of support. Let's take a quick look at, of course, Apple. Always look at Apple. I'm long Apple. I, you know, I do not like what I'm seeing here. Unfortunately, you know, I've been long Apple. I got into Apple roughly around here. Sometime over here in the low 130s around 130. So, you know, I'm in the hole a little bit on my Apple holdings. And you know, what can you do? But I'm in for the long haul. We know Apple is a great company. But it had been moving up nicely. And it, and it, you know, just got hit back down here. You can see the 20 day is just about ready to cross down below the 50 day. As a technical analyst, you know, these are the things you don't want to see. You don't really want to see a good crossover here. So Apple really needs to get on board here and start to move higher again. You know, we've got the uptrending 200 day moving average lurking down below. Who knows? I mean, Apple could certainly come down and touch the 200 day. And you know, I really don't want to see that because obviously I'm long Apple, I wanted to go back up. But there's a point where you have to make a decision. Do you get out or do you keep holding because you're you're going to hold for 10 years or more? I mean, it's up to you. Every every every trade should have a stop loss at some point. Whether that's a 10% stop loss 20% 30% you decide. But for me, you know, I'm holding my Apple shares for now. And we'll see what happens. And by the way, I bought deep in the money call options as I teach, I didn't buy the shares about deep in the money call options. And so hopefully that will, you know, I'm hoping that Apple will go back up in price because my call option will gain in value as well. So Apple, you know, not looking the strongest right now, it's certainly it's come down a long way. The 20 day moving average might be crossing below the 50 day, we don't really want to see that. But I'm looking down here at the RSI indicator, it's getting down to some oversold level. So this is what's keeping me confident that Apple will probably maybe find a bottom here start to kind of meander around the bottom because it is getting oversold on the RSI. It's not telling me that it could turn around right away, but it is telling me that the selling could be coming to an end. I mean, Apple's come off a long way. And so let's see if we can find a bottom and then start to move back up. Let's take a look at Amazon. This is all about technical analysis, how I look at charts and how I see patterns develop. We've been talking about Amazon stuck in this wide channel, also within the congestion pattern triangle here, it has broken down below the 20 day 50 day and through the up trending triangle down to the 200 day moving average right here. This is this is basically a line in the sand people for Amazon. It's sitting right on the 200 day moving average, it's fallen out of the triangle. We still have the the channel bottom here. But Amazon needs to to find its footing here and and and start to move back up. Now I have no stake in Amazon. I'm just reading what I see on the charts. Amazon's been weak. I mean, it couldn't break out above the triangle couldn't get above the resistance line. So it's been falling back down sitting on the 200 day if it if it continues to fall, it will find support. Here's a last line of support right here around what prices this maybe 2875 for for Amazon. If it if it gets through this support line right here, it could go down. It could go down. That's just the momentum that will carry it. So Amazon needs to find its footing here. Maybe some buyers will come back in. But you know, here's what I'm seeing. This is we need to see the 200 day moving average hold and knock the stock back up. Let's take a look at Google we talked about had the blast up higher. Here's where earnings were announced, went up higher, kept going higher. And now it's sitting on the 20 day moving average. If this doesn't hold, it's going to come back close this gap and probably hit the uptrending 50 day moving average. So we need to see buyers step in if we all want to be long and strong. If we all are bullish, we need to see buyers step in at these support levels and move the stocks back up. But the next line of support obviously is the 50 day moving average for Google. This is still uptrending uptrending even the 20 days still uptrending. So that's good. You want to see moving average lines that are that are sloping upwards. That means the stock's still in a good upward momentum. So we got Google. What else? Let's take a look at Tesla. Tesla's been hit pretty good of late. Anyone who's been long test has been wondering what's going on? Why is it going down so much? We had the triangle pattern here. This was right before earnings. It went up for a little bit, came down a little bit, found some support and I drew the other triangle. Let me darken this so everybody could see what I'm looking at. Do a little manual labor here. Okay. And the other line here. Darken this up, widen it out. Okay. So here's what we've been seeing. Had the congestion congestion and it popped down through the congestion went below the uptrending 50 day moving average got hit pretty hard this week. And so here we may be seeing another bit of hold pattern. It could be another triangle, a possible triangle here. It may may congestion may try to you know, find its footing, go sideways a little bit, or you've got the uptrending 200 day moving average lurking all the way down here in around $462. Wouldn't want to see it fall that far. But our side getting down into some not oversold completely, but definitely lower levels. So that means we could find some support here, maybe do a little sideways trading, probably carve out another triangle pattern. We can we can draw a little early one here, see what happens over the next week. See if it can can remain in here and then move back up again. I know there's a lot of long bullish Tesla people out there. So I mean, you saw the last congestion pattern here, it went a long ways. So now it's given back some of those some of those gains. So be careful. Let's see if it can congest here and find its footing and go back up. Otherwise, you know, the 200 days lurking down below. What else? Let's take a look at I want to show you PayPal. You know, I love PayPal. I love Square. I love the online payment providers. This is a daily chart of PayPal. This is a great uptrending uptrending momentum stock. Good chart patterns. Now you can see it got a little bit ahead of itself. It really kind of went vertical here. So obviously there's going to be some pullback. But what I like is that it's sitting right on the 50 day moving average. Everything's still trending upwards, 20 day, 50 day still sloping upwards, 200 day sloping upwards. We had a nice little pullback from over bought to the mid range here. So we probably see some support if the market, the market itself, the general market finds its footing PayPal will definitely continue with the uptrend. So I like the chart of PayPal. We may try to get involved in our newsletters next week. I'll take a look at Square because Square was also a stock that we got involved with in our vertical spread trader newsletter. It was the same had the same pattern as PayPal had a nice run up pulled back. So we got into the trade right around here right was finding support at the 50 day moving average. And we sell put option credit spreads. That's what we do in one of our newsletters. So we we did a trade on Square and we're hoping that the market will find its footing and move it back higher just like PayPal. What else do we have? Let's look at GameStop. Yes. GameStop had a had a comeback had a comeback this week. That took me by surprise. I have no stake in GameStop, although I did sell some very very very far out of the money put options way down here between the five and ten dollar puts. I like to do stuff like that. But you know last week PayPal GameStop was trading in the forty dollar level and then all of a sudden it had this massive move higher. I ran up a hundred dollars a share. I'm not really sure what there really wasn't any news about it. But it went up. It came back down. So here we are. GameStop still hanging around. You know if you guys are still bullish out there they GameStop gave you another chance. Did you get out? Well I don't know. Take some profits off the table or you hold until it gets back up to $500 again. Anyway it's kind of fun to watch. I really don't have any stake. I just like to see what's happening. What else do we have? AMD we look at. You know I love AMD. I talk about it all the time. But AMD is sort of in this downtrending channel which I drew last week I think. And last week it was it you know it was coming down off of the 20 day moving average which is now downsloping. The 50 day has started to curl over now. Okay so these are things to look at. The 20 day has been moving down. The 50 day is now starting to curve over which is not a good sign for stock because that tends to mean the stock has taken on a new trend meaning it could be entering a new longer term trend which is down. You can see the channel that I've drawn. Let me we can actually let's take these off and show you what I do. Remove this line. Remove this line. We can redraw. We can redraw the channel. So lengthen it out. We got bottoms here. Connect the bottoms. Okay so that's our our channel now. AMD is in this channel. It bounced right off the bottom here. So now it's kind of meandering. Could be making a little congestion pattern right here. I like AMD for the long run. You know I've sold puts. We've sold puts on it but but we've used our strike price all the way down here. We're selling puts all the way down here and getting paid for that which means we're obligating ourselves to buy AMD potentially in the future for in the $50 range. Okay so it still has a long way to go. It's a $30 drop. So I'm hoping that AMD finds its footing here and starts to move back up. If it does it'll hit resistance at this down trending channel line. So if it does pop back up we're looking at high 80s low 90s for the next resistance. If it could pop through it then it'll keep going higher. That is AMD. What else do we have? Netflix. You know these are all the very popular stocks we like to talk about. Netflix still in this long channel been in this range for a long time. Getting up towards the top of the range again. We'll see. It's above the 20. Well it's between the 50 day and 20 day right now. Let's open this up a little bit. Okay you got the blue 20 red 50. So it's trading in between those. I mean Netflix is still sort of in an uptrend but captured within this wide channel. So let's hope that Netflix can keep going up. Probably find some resistance up here if it does get that high and hopefully it'll break through otherwise it'll get knocked back down. Lastly let's take a look at Walmart. Walmart another one of my favorites but just getting hammered. Getting hammered. Look at this. Just all this escalator down. Elevator down. It popped up here. It was over about $147 a share. Now it's just under $130. Getting well oversold on the RSI. I mean Walmart you can't bet against Walmart. The largest physical retailer on the planet. It employs outside of the US government. I think Walmart employs the most people in the US. And it has every product basically that you can never want to buy outside of Amazon. Walmart is a great company. This could be definitely a potential nibble area. If you're if you're looking to get long Walmart. Yes it's certainly in a downtrend but you don't have to go all in here. You can nibble a little bit. If it comes down more you can nibble a little bit more. Walmart is not going to be in a long term slump. It's a great company. It does well. People buy all all their products. They shop in their stores. Buy online. So Walmart is just taking a little hit here. And you know if I wanted to buy Walmart which I'm thinking of doing. I would you know buy in spurts. Nibble here and see where it goes. So Walmart great company. Getting oversold. We'll see what happens next week. And lastly let's take a look at Caterpillar. Another stock that we've traded in our vertical spread trader newsletter. Caterpillar just in this beautiful up trend. It's gotten a little ahead of itself. Just kind of went vertical. So now it's sold off towards the end of last week. Took about a ten dollar hit from the highs that it made. And let's see is Caterpillar at all time new highs here. Yep hit all time new highs this week. It's a monthly chart. So definitely hit all time new highs. Kind of went vertical. It's getting a little overbought on the monthly chart. This is the daily chart again. So it was an oversold overbought territory on the RSI. And you can see it's coming back down a little bit. And you know we'll see if it comes down to the 20 day or just pauses and goes back up. All right so that's the your basic Saturday synopses. Look at look at some charts. Once again let's take a look at let's take a look at the VIX. We haven't looked at the VIX in a while. The VIX is the volatility indicator. Obviously when the market goes down the VIX pops up. That's volatility pops up when the market goes down. People get scared. They start buying put options. So that raises the volatility level in the market. So we got the spike. Remember I talked about you got the spikes that don't last very long. Spike here spike here spike here spike here. So that means these quick two or three day spikes and it comes off again. That means the market's going to go back up. Right. So they move inverse with each other. We got the quick spike. Have to believe VIX will come off. That means the market will probably go back up again. So there you go with the VIX. Take a look at the SPY one more time. Sitting on support right at the 50 day. We need it to to move back up again which I know in the long run it will. Short term day to day. Who knows. But probably within the next few weeks you will probably see the market start to go back up again. I'm optimistic for the market. That's just me play as you will stay within your comfort zone. And if you have positions on make sure you set stops. No play defense a little bit. You don't want to give it all back. You know that's just my opinion. My my advice for anyone in the market. OK. Well there you go. That's it for your Saturday synopsis. Look the charts. Let's quickly take a look at our website. We always go smart ops and sell it. Download our put selling basics book right here guide. Go to our website. You can put your name and email address in here. We will send you a free copy also our services tab to newsletters. We still make it puts and we sell vertical put option credit spreads in our spread trader newsletter. And of course we have our one on one coaching doing real well with that lots of people coming to us for help. We get you going get you to the next level. So if you're interested in that you know you can always sign up. All right. That's it for me today. I hope everyone has a great weekend and I will see everyone next week. This is Lee Lowell signing off.