 Hello everybody, Lee Lola here, smartoptionseller.com. Today is Saturday, December 12th, 2020. How's everyone doing today? Listen, today is gonna be all about technical analysis. Basically a beginner's course on technical analysis. I got lots of people asking me, Lee, how do you look at charts? How do you see the patterns developed? What kind of technical indicators do you use? I need to get better on my chart reading on my stock chart analysis. Can you help me? What do we do? So today is gonna be all about the technical analysis because quite frankly, if you wanna trade options, then that's what we do. We're options traders at the smartoptionseller. If you wanna trade options, you have to know how to look at the stocks first and you have to know how to determine where the stock may end up going. And as we are option sellers, getting the direction right isn't necessarily the biggest deal when trading options. The way we do selling options, you don't have to be perfect on getting the stock direction right, but it certainly helps. So before you could ever trade options, you have to know how to trade the stocks first or I should say you should know how to look at the stocks and figure out where the stocks may be going. And the best way to do that is by using technical analysis. And technical analysis is all about chart reading and how to figure out the support resistance and which way the stock is most likely to go. So let's break it down. Let's start right off with how do we check a chart? How do we look at a chart to see where it may be going next in the future? Because quite frankly, if you wanna make money trading options or even trading stocks, you have to have a good idea of where the stock may be going to. So let's open up the chart of the SPY, which is what we usually do on our Saturday synopsis. We always look at the charts. But the whole thing about technical analysis, at least for beginners, is you have to be able to figure out or see patterns on the charts. You have to figure out your support and resistance line moving averages. And I'm going to show you what I have on the charts, technical indicators that I use. And I typically go over this every Saturday when I do these videos. So let's open up a different window here and take a look at just a plain chart by itself. Okay, this is a chart of the SPY without any indicators or moving averages on it. And you want to get an idea of which way the stock is trending. One of the biggest ways to have success in the stock market by looking at stock charts is you wanna look for momentum. You wanna see which way a stock is trending. And by that, I mean, is it trending up? Is it trending down? Or is it trending sideways? Okay, stock charts, it's a lot like physics, okay? An object in motion tends to stay in motion in that same direction until it's forced to move in a different direction. And trading stocks is the same thing. Most stocks tend to move it in a general direction. They're either moving up, they're either moving down or they're moving sideways. Your goal is to try to figure out or try to get on board a stock that is trending and has the momentum behind it. So how do you do that? Well, number one, you wanna look at a stock chart that has some trend to it, has a general direction. So if you're looking at the chart of the SPY since the bottom of the coronavirus back here in February, March, you can see that the stock has been moving up, okay? You always wanna look at a chart from the bottom left to the top right to see which way the stock is going. In this case, the S&P 500 in X was absolutely moving higher, hit by the coronavirus and started moving up again, okay? So you wanna start with a plain chart without anything on it. You wanna take a look at where the stock is trending because you wanna get on board the momentum. You wanna get on board with a stock that has movement going in a certain direction. Now, when it's time to put some technical analysis indicators on here, you want to use some technical indicators. So let's take a look back at my typical chart here. On my chart, I always have three moving averages. I have the blue line, which is a 20-day moving average, the red line, 50-day moving average, and this green line is a 200-day moving average. So those three numbers, the 20, 50, and 200-day are very widely followed moving averages, okay? So if everyone's looking at the same things, you sort of get this self-fulfilling prophecy where the stocks will either bounce or come in contact with these moving averages. And as you can see, the SPY, you've got the 20-day and 50-day, the stock tends to bounce off either one of those moving averages. So if you're looking for a bullish momentum, you wanna make sure that the moving averages are sloping upwards. Very important that for a bullish trade, you wanna have moving averages that are sloping upwards. Now here you can see the moving averages were sloping downwards. That means it's more likely the stock is going to move down than up. So use your moving averages as gauges of which way the stock has been trending over time. 20-day, it takes 20 days worth of trading and averages is out and then it creates the line. The 50-day moving average takes 50 days worth of the last 50 days of trading and it averages is out. So you can see that the smaller number of days you use, in this case, this is a daily chart. 20 days, the line is gonna move faster. It's gonna have more ups and downs. The 50-day is a little bit smoother and you can see the 200-day moving average because it takes 200 days worth of pricing and it smooths it out. So the 200-day moving average is a much smoother line. It's a very long-term type of moving average. Now down on the bottom, I have the RSI indicated. The RSI indicator is an oversold indicator and typically the RSI uses 75 and 25 as the levels that are considered overbought or oversold. You can choose any numbers you want. In my case, I choose the 80-level and the 20-level because I want a little more buffer to let me know whether a stock is really overbought or really oversold. Now you can see here, back in February, the RSI indicator got to very oversold levels but the stock was still up here so it still had time to fall. It had room to fall. So what this is telling you is that the stock is getting oversold but it doesn't mean that it's going to turn around right from this point. So just use it as a gauge of saying, hey, be aware that the stock is starting to come down towards the bottom. Obviously we had more to go but I use it as just a warning sign. I don't use it as an indicator to tell me, okay, the stock's ready to turn around right now. So it's just more of a hey, let's watch it for a little bit and see where it goes. So I have the three moving averages, the RSI and now the next thing that you need to do is you need to start looking for support and resistance levels, which means you draw lines along certain tops, certain bottoms to try to help you find the trend of a stock, okay? And then you look for pricing patterns. Pricing patterns, by that I mean, we've talked about the W pattern before, we've talked about the triangle pattern before. So it's all about looking at hundreds and hundreds of charts over time. This is how I became pretty good at looking at charts is that I've just spent years and years and years looking for price patterns, looking for support and resistance levels, looking for channels, looking for triangles, looking for bull flags. These are all, all of these are patterns that you'll see happening over and over and over again. And you can't just blindly look at a chart and say, okay, I'm just gonna get in here or I'm gonna sell here because you may be completely wrong. So you have to use these patterns and the support and resistance levels to give you an idea of timing wise, is it a good time to get in or out? Now we talked about the W pattern, I wanna show you the W pattern in a couple of different stocks. The W pattern is typically a bullish pattern, okay? When the stock, now I have people emailing me all the time asking me, Lee, is this such and such stock making a W pattern? I kinda see a W pattern, I'm not really sure. The W pattern is pretty easy to spot. I mean, you can see the pattern very well. So if you kinda have like a sideways or an unbalanced W, it's probably not a true W pattern. I mean, it's pretty significant. You can see it looks just like the W pattern where the middle peak is lower than the two legs, okay? Well, I guess you can call it a lowercase W where the two legs are higher than the middle for the most part, okay? And then the resistance line is at the top of the two outside legs. So we can actually make this a little bit darker and wider, okay? So here you've got the line here. Now, typically if the stock was gonna go through resistance, you can see this one day right here, the SPY moved above resistance, but it came back down, went back above, came back down. So it's trying to fight its way through the resistance line right here. And it was meandering around and we also drew this triangle pattern, which is also another congestion pattern. You can see where a stock gets tighter and tighter. The ranges get smaller and smaller. It's building up all this energy until it eventually pops out in one direction or another. The way that you can tell or you can guess which way the stock might move out of the triangle is you have to look from where it came from, okay? This was an uptrending stock. It's meandering, it's creating the W pattern. It's moving up and it's coiling in this triangle pattern. Most likely it's storing up the energy to move higher because it wanted to continue from the direction it came from. If it was a down move and it was creating a triangle pattern, most likely the next move would be lower, okay? So you have to learn how to spot these patterns. Now I always look at the patterns on a daily chart. Now if you're looking at a one minute chart, now each bar is one minute worth of trading. It's gonna give you a completely different pattern. It's gonna look completely different. I like to look for the patterns on a daily chart only. Okay, so let's take a look at a couple other charts that have the W pattern. Now I've shown this before, we will look at Intel and it's all about trying to spot the patterns, okay? Back here, Intel made a pretty significant and it's completely viewable where you can see it. You can see the pattern right here. It's unmistakable. This is the word I was looking for, unmistakable pattern, okay? And it blasted through the resistance line and it went above, which is what it was supposed to do, had bad earnings, so it came back down again. Now you can see it created another W pattern down here, lowercase looking W pattern. And you draw the resistance line at the tops of both legs, the outer legs, okay, here's the resistance line and Intel has blasted back above it. Very bullish pattern. Now it's come back down again, so the resistance line now acts as support, okay? If Intel comes back down, it's probably going to meander around this level right here. So the W pattern is pretty significant. Let's take a look at another stock for, give me a second here. Let's take another look. I think AMD is another W pattern, advanced micro devices. It's pretty recognizable, lowercase W, leg, middle peak, and then the other leg, okay? So AMD is now trying to break through the resistance. You'll probably get some, that's why it's called resistance. It's getting knocked back down. It wants to go through, but it's being fought. It's being pushed back. So we'll see next week if AMD could pop through the resistance line. It's coming up to the 20-day moving average right here. Now we'll also notice that stocks will tend to gravitate towards moving averages. That's another thing you need to look for. So you got the W pattern, very bullish. Once it gets through the resistance line, it should be off to the races. So you need to learn how to spot these patterns. Now what are some of the other patterns we like to look at are the triangle patterns. We look at the triangle patterns all the time. Triangle patterns, Apple. We talk about Apple just about every week on these videos. Apple, bullish momentum, okay? It's got good momentum. Now it's coiling into this triangle pattern. In order to draw the triangle pattern, you have to connect just a basic trend line along the tops of the range and along the bottoms of the range. Now it's not black and white. My assessment of a triangle could be completely different from somebody else's. And it's all in the eyes of the holder, okay? So you have to, there's some subjectivity to it. But this is what I see. I see a triangle pattern. And this past two weeks, Apple has blasted out of the triangle pattern. Has it really gone too far yet? It's coiling again. So hopefully it will, and you can see that it's holding right on the 20-day moving average. And let's open this up a little bit more, okay? So you can see right on the 20-day moving average, let's hope that Apple bounces on Monday moving to the upside. Let's take a look at Amazon because Amazon also has the triangle pattern and the channel. So here's, this is Amazon triangle pattern closed yesterday on Friday, December 11th. Popped a little bit below the triangle, but it's all based on where it's drawn. So Amazon is on the bottom leg of it here. So we're hoping that it's gonna pop back above starting next week. Now, another thing we can look at is the channel. Channel is just a stock that's been caught in a pretty wide range. Amazon, you know, it's a very expensive stock. So it's starting to move within this range. You can also draw other channels, okay? So here, let's move back here. You can, we can draw some, you know, you move along the tops here. We've had Amazon was sort of in this, this channel right here. Now a channel is just an area where stock keeps bouncing, you know, from the top to the bottom, moving along here. And then finally it will either move convincingly below or convincingly above and finally Amazon moved up. And now it's in this other new channel. We can take a look at Microsoft. I know Microsoft was making some good channel patterns. Currently in this kind of meandering channel pattern right here, you can kind of see, you can kind of see a little triangle here, okay? It depends on how you wanna draw it. So I've got a triangle within the channel. Now you can look back here, look at this nice tight channel for Microsoft. It was coming from the downside, bullish meandering, and then it was just off to the races again. Had the down move coronavirus, but pop back up. So technical analysis is all about looking for price patterns, you know, you've got the triangle, you've got the channel, the W pattern, all these different things that you can find on a chart. Let's take a look at some others, see what else we have here. What else, what other stocks were in a price pattern? I think Nike had something, yep. So Nike, we had this triangle right here and it just blasted to the upside, okay? It was coming from the bottom of the coronavirus, moving higher, got into this tight range and then blasted higher again. Google, I know we had a bull flag on Google. Bull flag is another bullish pattern. Bull flag is when it has a very strong one or two day up move and then it starts to come off slightly creating a flag and then typically it will blast higher again out of that flag. I had BMY, Bristol Myers was another stock that I had drawn a bull flag on. I was projecting a move to the upside out of the bull flag. Unfortunately, that has not occurred. So it's not a hundred percent. It doesn't work all the time. I mean, nothing's guaranteed, but this was a good bull flag that I saw. I was waiting for it to pop out. I got ahead of myself and I should have waited for it to pop out, but it kept moving lower. So that one didn't really work out so well for us yet, but since we sell put options in our newsletters, we have a lot of cushion forever in case we're incorrect. So I want to give you some resources on where you can go to get some help on taking your trading to the next level, learning more about technical analysis. Now this is sharp for Tesla. Obviously we can see Tesla triangle pattern and just blast it out of that. Came from the downside, had bullish momentum, congesting and moved again. So you have to find these patterns. You have to know what to look for. Look for your support resistance levels. Look for the moving average. You can see that's actually good. Look at a few other things. You can see how the stocks like to move or bounce off of either the 20 day or 50 day moving average. Tesla, it was hugging along the 20 day moving average popped up here. So if you want to wait, don't feel bad that you may missed out on the move. Wait for it to come back down to a moving average line. Walmart is perfectly doing that right now. Looking at Walmart hugging the 20 day moving average and hitting the 50 day moving average on the extremes. So Walmart is perfectly right at the 50 day moving average. So if you're thinking about getting long Walmart, let's wait to see if it bounces here off the 50 day moving average. You can see how they hug the line. And a caterpillar was another one doing the same thing. Hugging the 20 day and 50 day moving averages. These are widely followed moving averages. Everyone's looking at the same thing. So they're all waiting for the same thing to happen. Costco was another stock doing the same thing. This is a chart for Costco, 20 day, 20 day, 50 day. It's gonna bounce either off the 20 day or the 50 day. If it moves convincingly below, then you may have a new downtrend. Let's take a look at Zoom for a second because Zoom is a good one that we've had in a downtrending chart. So Zoom obviously was up big, was bouncing off the 20 day, started to move lower. So now we have this downtrend channel. You have to look for these things. Now the 20 day and 50 day, the 20 days now sloping downwards, the 50 day has started to curl downwards as well. And now you have resistance, a downtrending channel. So it looks like anytime Zoom may pop back up now, it's either gonna get hit back down by the 20 day or the downtrending line here. Okay, I think, what else was it? Was it Peloton? Was another one that was in a now, a downtrending. Okay, so Peloton got into the downtrending channel. It's popped back out. So the downtrend may be over. You have to wait, see if it starts to move back up again then Peloton's in a moving higher. Let's take a look at some websites that I have for you. Give me a quick second here. Okay, so let's take a look at some websites here for you. And we have this tradingview.com. Some people ask me, well what's my, how should I look at stocks? What kind of platform should I use? So these are all free platforms. Tradingview.com gives you a good way to look at some, look at charts. You can create watchlists that they have a paid version. And I think that you have a, you can use it for free as well. Barchart.com also is a great way to look at charts. You can also look at other things for free, especially on the options. So you can look for some unusual options activity. Obviously stockcharts.com is one we always like to look at free place to look at charts. You can also go to the chart school. I've shown this before. If you click on the chart school up here, it will bring up like a tutorial on how to start your technical analysis to look at charts. And what else do we have here? Oh yeah, chartpatterns.com is another one that I talked about before. I can tell you about all these different chart patterns and how to look for them. And if you click on the channel, it'll show you if it's coming from the downside, it's a bullish channel. If it's moving from above, it's a bearish channel. What else? If you want to look at, so you can go back to get the, any, all, you can look at all these charts, okay? So chartpatterns.com, bar chart, stock charts, trading view. And lastly, let me pull up a couple of books for you. Charting made easy and seven chart patterns that consistently make money. John Murphy at Downs, you can get these off of amazon.com. Okay, so let's go back to the charts, take another look at things. So that's really your basic introduction to learning about how to read charts. Technical analysis, because if you want to trade options, you have to learn how to look at the charts first. Give yourself, you know, a leg up on where you think the stock may be going. So look for the patterns, the W pattern, very bullish, look for the triangle patterns, the bull flags, the channels, the support resistance, the moving averages, all of these things, learn a little bit more about, learn how to look at them, how to read them, and watch for the breakouts. It's all about breaking out of the patterns, okay? That's gonna give you a better opportunity to profit. All right, so let's go over our weekly Saturday synopsis where we take a look at the charts, see where we think where things are going. Obviously we talked a little bit about this already. You know, the S&P 500 had a breakout moving higher, just this last week, yesterday, Friday, December 11, 2020. It's come back down to the 20 day moving average, had a little bit of sell off this week. Not a huge sell off, but it came back down. We've got it bouncing right on the 20 day moving average, so let's see if it's going to go higher over the next week. So what else we have? Let's take a look at the Dow. Dow industrials, still above the resistance line here. We had a small triangle pattern right here, I know you can't really see it, but the Dow is still above the resistance line and falling right on the 20 day moving average. Let's take a look at the NASDAQ. Same thing, my charts keep moving around on me here. NASDAQ was in this big ace ending triangle that we had drawn, moved above the resistance line. Also has the W pattern right here. Here's the leg, middle part, and there's the W right there. So it's moved above the resistance line, hasn't come back down to the 20 day moving average yet, but we had the Dow move this week. So the index is still look strong. We got the coronavirus vaccine that's been approved here in the US and I think other parts of the world and in the UK, it's been ready to go. So people are going to start getting the vaccines now. And so the light at the end of the tunnel is definitely there, the market always looks ahead to brighter days. So I think we still have much more upside to come. 2021 should be a pretty good year. I know stocks have made incredible move higher, but as long as their earnings are still growing, then stocks should keep moving upwards. Okay, what else can we look at? Individual stocks pretty much went over, a lot of the individual stocks. Let's take a look at Netflix. Netflix is also another stock that's sort of in this channel. It's hovering around its 20 day and 50 day moving averages. Let me blow this up here so you can see. 20 day and 50 days trading right in between both. So it should be meandering a little bit longer. I'm hoping it's going to start to move back up towards the upper part of the range. All right, so there you go. That's it basically for your technical analysis lesson for today. I think the markets are still looking pretty strong for next week. Once again, look for the patterns, use those free resources, educate yourself on how to find these stocks, try to predict where the stock is going to move to next. Don't put your money on the line yet unless you feel comfortable with how to look at the stocks. Here at the smart options seller, one thing we like to do is we like to sell put options because picking the correct direction isn't the deciding factor on whether we're going to make a profit. So that's it for today. If you feel this video has helped you, give me a thumbs up down below. Leave me a comment. Don't forget to subscribe to this YouTube channel and once again, you can always go to our website, smartopsonsseller.com. Don't forget to download our free put selling basics guide under our services tab. We have our newsletters, always selling put options, selling put options spreads. That's what we do and our one-on-one coaching if you need a little bit more help getting to the next level. Okay, that's all for me today. I hope everyone has a great weekend and I will catch everyone next Saturday. This is Lee Lowell signing off.