 Hey everybody, how you doing out there? Lee Lowell here, smartoptionseller.com Today is Saturday, November 6th, 2021. Here we go again. Yes another Saturday synopsis What do we do? We look at charts I try to take my 30 years of trading experience and give you some ideas of what I'm seeing on the charts what I'm looking for and Where I expect or hopefully expect stocks and the index is to go in the future as an options trader it is paramount it is extremely critical that you have an idea of Where a stock may be moving to next if you're going to be trading you need to know or have a decent idea of where the stock is going and The way that I do it the only way that I do it is by looking at the stock charts the charts Give me all the information I need all that fundamental data about a company whether it's their earnings You know the revenue the dividends PE ratios all that stuff gets reflected on the stock charts because all that information is Factored in and when that information is factored in stocks trade for a certain price and You can see those prices on a stock chart and stock charts can tell you can give you hints of where the company or the stock Price might be moving next that is what I do that is technical analysis And I'm here and I make these videos for you to try to help you become a better trader to help you understand and see How technical analysis? Aka chart reading could help you become a better trader because if you know where a stock may be moving to next you can make higher Probability trades now. There's no guarantees in trading not every trade is going to work out not everyone's going to be right but if you want to make higher probability trades then Learning how to read charts learning how to read where a stock is moving to what patterns They're making how they interact with technical indicators can give you a huge leg up in becoming a better and more profitable trader So I make these videos try to help you out try to give you an idea of what I do for a living basically and and what I'm looking for on my charts so Sit back relax for you know half hour or so however long these videos are usually and I'm going to walk you through what I do what I see and what I'm looking at when I look at a stock chart All right, so let's just jump right in If you've been with us for a while This is a very familiar screen. This is my e signal charting platform a lot of people ask me What do I use what you know what what platform to use what charts do I use? So I go over some of that information first I try to tell you you know the the company that I use you know What indicators I use and then we just go from there So this is e signal these signals been around for a long time You know we're 20 close 30 years Maybe they are data vendor data provider of charts and quotes for stocks commodities options all that all right So we open up the chart And we always look at the S&P 500 first because I feel that's the the best measure of the market as a whole and many People feel that way as well a lot of times you'll discover and I say this each week When you have enough people looking at the same things it sort of becomes a self-fulfilling prophecy whether you whether you believe in that or not It happens so everyone I shouldn't say everyone but a good portion of the people that track the markets think that the S&P 500 is like you know the king of The overall market and I feel the same and what we do is we look at the SPY Which is the exchange traded fund for the for the S&P 500 trades like a stock can get in and out All day long and it just mirrors the movement of the S&P 500. It's just one-tenth the size Okay, so we look at the SPY and what you'll see on my chart here is this is a daily bar chart a daily Open high low close bar chart Okay, and I can open things up. I can widen out so you can see Each vertical line here each vertical individual line is one day's worth of trading and it has the the open of the day Which is signified by a little dash mark on the right side of the bar The top of the bar and the low of the bar signifies the the high of the day and the low of the day for that Stock and on the close it has a little dash mark on the right side of The bar you can see right here this little bar. It's got a little dash on the right side. That is the closing price of the day Okay, so these are daily open high low close bar chart bar. It's a bar chart now some people use candlesticks I don't use candlesticks. We can easily change it to candlesticks. So these are candlesticks I don't have the red and the green colors that typically signify whether it's an up day or a down day I just use one single color and it's the open high low close bars. Okay What else do I use? I try to keep things very simple to help me understand where a stock is going to move. I have three Moving averages on the charts. I have a 20-day simple moving average a 50-day simple moving average and down here is the 200 day simple moving average and when you change lengths, this is One minute charts one minute bars. Okay, people that are hyperactive people that trade intraday use One minute bars to help them gauge how to get in and out a lot of times during the day so each vertical line is one minute worth of trading and the Moving averages become they're called period moving averages. This is the 200 minute moving average 50 minute 200 moving average and 20 minute moving average So when you change from a minute to daily charts this the moving averages are still based on 200 Units of movement in the case of my daily chart the 200-day moving average is based off 200 days worth of Trading on the minute chart. It would be 200 minutes worth of trading. So just some people ask me about that So we want to clarify and down here is the 14-day RSI indicator that we use the default default numbers are the 14-day and what does the RSI tell you it's more of a momentum more of an overbought oversold type of indicator and When it gets the default if you put the RSI on your charts for the first time the default is the 7030 lines It goes from zero to a hundred, but the default you have these horizontal lines here is 7030 meaning if it gets up to 70 it's considered overbought down to 30 it's considered oversold Well, I I move those out. I'm up to 80 and 20 gives me a little bit more width or height I should say to really show some extreme overboughtness and oversoldness and So I've I over the years. I've figured out the 80 20 levels are pretty good and When something gets overbought or oversold it doesn't necessarily mean this the turnaround is gonna happen right then and there It's just more of a warning guide that hey, you know flashing things are getting overbought Just keep an eye on it or if it's oversold keep an eye on it because a turnaround may be coming soon Okay, so that's it. That's all that I use the RSI and three moving averages the rest of my The the rest of the way that I figure out where stock might be moving next is based on patterns and Things like this just chart patterns, they're called. This is a W pattern. We got triangle patterns wedges All these things that you can find and use you can look online You can do a Google search for chart patterns and there's a website that I that I tell people about called chart patterns calm that will show you all these things you got channels and W's and symmetrical triangles and ascending triangles ascending wedges is all these things that will show up over and over again on a chart and they typically Produce the same results. So as you look at charts over the years You'll find these patterns that happen over and over again in human nature doesn't really change. So the results typically are the same I Mean I've looked at hundreds of thousands of charts over the years and these patterns creep up time and time again And they they pretty much have the same results. So if you're good at spotting patterns It will help you With your profitability of trades. Alright, so let's take a look at what the market has been doing Let's talk about what I've been seeing showing you over the last few weeks of these videos Now we always like to look at the SAP 500. Like I said For the last, you know, almost about a year now Almost a year that the the market had been in this nice slow uptrending very safe easy uptrending channel beautiful slow moving Upwards chart great, you know, if you're long the the market, this was a great year for you from last October to this October or September was great. What happened in September of this year? Right around September 1st This was the all-time highs of the SAP 500 right around September 1st We entered into this little down trending channel. Now. I always say this every week Stocks trade on momentum stocks move in a certain direction Until something changes that direction typically that could be an earnings announcement or some kind of big worldwide event like the pandemic But that that was over very quickly as far as the stock market was concerned So stocks move on momentum until something comes along and pushes it in another direction now I think Well, obviously you can see we've made all-time new highs again here But what was the reasoning for the stocks to go down for this six-week period starting September 1st? Everything was in a nice uptrend all of a sudden September 1st rolls around. What happened? Why? Considering where we are now. Where where did this? Why did this little pause happen? People ask me that all the time They're really To me there really was no reason other than seasonal seasonal August September and part of October typically seasonally annually Our more bearish is a more bearish period for the year August September part of October There really wasn't any other reason that I saw. I mean Covid numbers are still out there that that could be a thing inflation, you know, the US Federal's are Potentially raising interest rates though, but those that narratives been out there for a while But come September 1st. I think it was just more of the seasonal People, you know, we're scared of whatever and they were taking profits and Once we entered this downtrend and I drew the channel, you know, this is called a channel You can connect the tops and the bottoms and try to create this channel pattern a few weeks ago I was saying The until the market pops outside to the right-hand side here of this downtrending channel We need to be on caution because if we're trying to get bullish, we don't want to get bullish while the stock The market is making its down move within this channel. So Patience was key at that point, you know, you don't want to jump the gun But once it started to trade outside of the channel and started to move above the moving averages Then it was go time right around here When the S&P 500 was in the low 440s and then you can see look at this just just incredible power move the last few weeks Once a stock or index gets on its mojo It's off to the races because everyone starts to pile on because everyone's watching the same things if you learn how to spot These patterns just like millions and millions of other investors out there all looking for the same thing Once the market moves outside of the downtrending channel Everyone's watching for the same thing to occur and look what happened it just got powered higher and Everyone jumped on board and now we're at all-time new highs Friday yesterday October on November 5th. We made new highs didn't close on the high, but Made a new high so more all-time highs for the market. I think this is a good thing I'm bullish until the end of the year, but doesn't mean that we won't have pullbacks Through the end of the year, of course, we'll have a pullback Especially when you have a power move like this there has to be a little profit-taking you know gravity-inducing pullback because You're you're we're not on completely overbought area, but the RSI has certainly gone on a great tear higher and I I would like to see a pullback because The market's gonna keep going up But when you get these vertical moves up and that's when the down moves become violent and nasty I would rather have this nice slow uptrending movement in instead of this You know vert almost a vertical move up because then when the selling happens It becomes fast hard and violent and that scares people. We don't like that But anyway, this is what the market is giving us We have to go with what the market gives us so now I'd say maybe a little cooling off period could be Healthy let the moving averages catch up. Let the price action come down They'll meet in the middle maybe somewhere here and then that's the cue to get on the next Bull run to the next all-time high. So the S&P 500 looks good Let's look or I should say it looks it's had a nice powerful move. Let's look at the the NASDAQ Which is we look at the QQQ the triple Q's for our guide and same thing tracks the NASDAQ This had an even more powerful move higher the last few few weeks It all I mean It's the same as the S&P 500 but it seems a little bit more vertical meaning more almost straight up in the air And you can see the R size a little bit more into overbought area than the S&P 500 But it just had this power move and it came out of the down trending channel So right around here was the QQ to get in it got out of the channel got above the moving averages And it just gone on this tear So again, I'd like to see a little bit of a pullback get the moving averages to catch up and then move on to the next round Will that happen hard to say it's it's a higher probability that we might that we will have a pullback Who's to say it could happen in one day it could happen in a couple days We don't know but those are the things that I'm looking for and Let me just pull up this one website here for you real quick. This is the this is the The CNN money fear and greed index. I look at this every once in a while, you know, I see people write about this This fear and greed index is right now at 85 Which is is calling for extreme greed meaning when markets go pretty vertical like that You get this extreme greed reading where everyone's on board Everyone's buying and everyone's jumping on and everyone's long. There's no more short sellers out there So everyone's on one side of the market And you get this fear and greed index getting very high and that that should be a sign saying, okay Let's you know, maybe put on the brakes a little bit here just one month ago You can see we were at extreme fear down at 27. That was all the way over here So that was your key to Possibly by if you look back on the charts about a month ago. We're in November 5th November 6 now So October 5th was right around Right down here right at the bottom of the of the channel And that's when we were at extreme fear in the market. Everyone was scared everyone was starting to sell so right on The lower end here. That's when we hit extreme fear That's the reversal point Okay, so the market moves inversely to the to the extreme and fear gauge at extreme fear That's when everyone's selling you're typically gonna have a bounce that no one's looking for and up here extreme greed is When typically the sell-off would occur. No one's no one's expecting it So just keep an eye on these things these things. I want to talk to you about so we fit all-time new highs Then that QQQ got above 400 for the first time the S&P 500 That was got up, you know above it's 458 100 468 now, so we're hitting we're hitting good numbers. Let's take a quick look at the Let's take a look at the Dow Jones and see where we are with that. Give me a second here and Pull up the Dow Jones. Where's my Dow Jones index here? Open this up above 36,000 for the first time ever the Dow Jones was was more of sideways action We've been talking about this finally got above the resistance line here And it's off to the races just like the S&P 5 and S&P 500 in the Nasdaq Dow Jones Above 36,500 it looks like did we hit it or not? Maybe just missed it by a hair. Anyway looking strong looking for the possible pullback to to blow off some of this overboughtness and Then once it pulls back hits the moving averages possibly and then it's up for the next ride till the end of the year So markets that the general indexes look strong Maybe in maybe due for a pullback, but after that it should be the next bull run will occur All right, so I like I like how the market is embolished through the end of the year But I will take these pullbacks as opportunities to potentially Get in for the next round of buying and in our newsletters. We're looking for bullish activity That's what we do We look for bullish setups when a stock or index looks like it's you know on the pullback and ready to go up That's our cue to get in we look for the bounces off the moving averages look for bounces off support lines You know even look at that fear and greed index every now and again That's what we do. We try to time our trades For when we think the bounce is going to current and we've had we've done a few trades in in these last few weeks While the market's been going up and it's been working out pretty good for us So let's take a look at some individual stocks, which is what we do typically every week every Saturday And I'll usually look at some of the more popular Popular stocks that people have a lot of interest in Typically we look at Apple first one of the most popular stocks of Microsoft had eclipsed Apple as the most Valuable company just in the last week or so. So Apple's still sitting at number two right now So we have Apple around 151 dollars a share Just kind of in this Slow uptrend with a lot of fits and starts a lot of ups and downs It's it's it's not the smooth uptrend that we've seen in the S&P 500 It has big peaks and valleys. So that makes trading a little bit harder It's a little bit more of an emotional roller coaster with Apple or at least it's been the last year or so Here was all-time highs for Apple had the down move got its mojo back and we're out, you know, right here 151 dollars a share Apples in in an upswing definitely in an upswing, but it comes with pullbacks So you have to have patience if you if you're invested in Apple You just have to stick to your guns and know it's a great company But it's trying to get through all these fits and starts which can be aggravating at times But Apple still it looks good now. I think through the end of the year. It's just gonna keep moving higher But beware of certain pullbacks Tesla which we love to talk about because it's just gravity defying gravity defying We've talked about Tesla the last few weeks. I mean look at this look at this this vertical massive move From you know 850 dollars a share all the way up to 1250 you'd almost hit in just the last couple weeks That's just insane of a move been overbought Been overbought through this whole time the RSI. I don't can't recall Another stock or index that has remained above the 80 level on my RSI for this long of a period of time it is definitely overbought what the charts are telling me but It's still been going up and I said last week that the market or the stocks could do crazy things Longer than maybe your money could last if you've been buying put options and trying to short the stock here You have been getting burned badly right thinking Tesla's gotta fall at some time. I'm just gonna keep buying put options and trying to short this thing And you've been getting reamed. That's very scary very It's a tough trade I mean, yes, we we we know it's going to have a pullback at some point but Taking a chance and shorting the stock and just buying put options You could end up losing and people have been losing. It's just staying up here. It's very it's for me It's defying all the the the things that I've known about chart reading all these years So I personally have been staying away From trying to get involved in this now I still sell put options on tesla But way way way out of the money way down here 200 300 dollars per share very You know one week two week options because I don't think tesla is going to drop all the way down here, but I'm not long or short the stock or or doing any positions that That work with strike prices up in this area because it's just too risky You don't I mean it could keep going up or it could drop 200 dollars a share in one day We just don't know at this point, but it's extremely overbought. I like to watch it because it's interesting I'm trying to learn things from this But tesla just You know people have just been powering this this this thing higher So I can't make a call when it's going to drop. I just know that it is overbought it is Um still overbought, but there is some divergence here With the price action going up The rsi is starting to fall down a little bit. So that could mean the selling. I mean the buying is getting Very tired up here So eventually it's going to pull back at some point. Will it pull back all the way to here? Hard to say. Maybe we'll have a pull back just to the uptrending 20 day moving average don't know yet So i'm just keeping an eye on it because it's fun to watch uh, the value the most valuable company Is microsoft And microsoft has just been killing it Has been doing great. Also just following the index. It's just gone vertical all time new highs Getting a little overbought on the rsi as well So if you're if you're thinking about getting bullish microsoft My my idea would be, you know, maybe wait for some of this froth to come off You have a little bit of pullback and wait for it to meet up with maybe one of the moving averages So you can see how it has been hugging along the 20 day moving average for a while If it comes off, it doesn't stay below the moving averages for long Here it was in the nice channel had the nice movement. You can time the balance is pretty good But microsoft maybe a little overbought here. I mean the stock most stocks and indexes are are getting overbought here So it's caution Remember the the fear and greed index where everyone's everyone's on the the bull train right now Sometimes it gets a little overheated and needs a good little pullback. All right, so I want to just show you some examples. So verizon. I talk about verizon all the time. This is verizon And I love the company. It's a great and it's the it's the largest wireless carrier in the us I would love to get long Verizon but not while it's in a downtrend These are the things that you have to think about when you're looking for a trade and you want to be Long a stock or buy the stock Look at a chart first and say would you buy this stock if I didn't tell you what this stock was what this company was Would you be interested in buying this thing? It's just been in this downtrend And why try to buy this thing when it's not showing you a signal that it's time to to get long When The the price action shows me it's in a bullish mode. Then maybe I'll entertain the thought of getting into verizon Right now. No, it's in this downtrend. It's fallen down below the channel made a low here Could be making a double bottom here. I mean it was oversold here went up a little but now it's come back down Until I see verizon bounce above the upper line of the channel here And the moving averages start to curl upwards Then I may entertain getting long verizon that probably won't happen till at least 54 55 dollars a share. It's close to 50 It's at 52 dollars now. So a couple more dollars. It has to show me some price action Same thing we've talked about chlorox. This is chlorox still meandering down here in the lows Kind of sideways action until chlorox starts to get above at least this line here. Maybe above the Down trending 200 day moving average You know, chlorox is still languishing down here. I wouldn't get long chlorox yet either even though it's a it's a good company So that's chlorox. Um, what other stocks we look at? amd Another power player some of these chip stocks have done great this the last couple weeks look at amd was in this channel. I mean this triangle I thought maybe it was going to pop down below the support here But it found support and popped above The down trending line and it's just powered higher Same thing with nvidia if you've watched nvidia same sector nvidia has just gone vertical look at this thing I mean gravity is going to take over at some point overbought well overbought here Uh, it has to pull back at some point And I can't say when that will happen, but it will But how far will it pull back It's hard to say until the price action shows me it's pulled back Some of this has eased off off of overbought maybe bounce off a moving average Then I would consider You know getting long again if I was wanting to get long this particular stock So a lot of stocks getting very overbought making vertical moves higher It's hard to keep up this momentum up here You need to have more and more buyers, but when you get overbought like this The buyers are starting to dry up And eventually you'll have a pretty violent move down So just keep an eye on these stocks that have gone vertical All right, because the down move could be scary But doesn't mean the next bear market's going to happen It just means the froth is is being taken out and then it it's healthy And then it could get ready for the next run higher All right, so let's take a look at some other stocks that we have Um, I'm trying to see some patterns Let's look at snapchat Because we we did some action in our newsletter this week for snapchat I wanted to show you what I was seeing here So this is snapchat snap is the symbol And it had its earnings big down moving its earnings typically This is a pattern that I've seen over and over again. You have a big down move you have this This is where it closed one day. This is where it opened the next day You got this big long bar right here And it starts to make what's called the descending wedge descending triangular wedge Which typically will end up popping back up to the upside Once it gets to the apex of the triangle here And you can kind of see it's sort of making a little bit of a rounded finding trying to find the support But the thing the things that's tipping me off is that the rsi had come down gotten pretty oversold and as the price action was still Moving down to a degree the rsi was moving upwards. That's called the divergence Okay, where the rsi starts to move up, but yet it looks like the price action still sort of moving lower And eventually all the sellers are done and then it can start to move up again Will it happen overnight? No this big move has to be digested for a period of time It has to everyone has to you know collect their thoughts and figure out where we're going next So it'll it'll It'll find its way down here. It'll it'll commiserate down here for a while with other people You know, we all got sold we had to sell out and people are trying to find out You know, what's next and it's finding some support and eventually the bottom feeders will come out and start to buy it back up The other thing Is was the volume that was there on the big move down We had the spike in volume right here this one day spike and then the volume started to cool off again to more normal levels That just means that or that's telling me the sellers are done There's no more massive selling anymore And we're trying to find a bottom here. So We got we took a bullish play in snap by selling some put options. I can't tell you what exactly that was Because it's not fair for paying customers Or paying members, but you know, this is this is some of the things I look for. Okay Same thing with intel sort of had the same Down move had the big one day down move was was getting oversold here I didn't pull the trigger on intel just because You know, i'm not the hugest fan of the company Right now. I like amd a lot better and obviously we can see amd's Stock chart is a lot nicer. It's been going up IBM had the same kind of Had a big gap down big one day Down move was a spike in volume as well I don't not showing it on here But you can see the rsi started to turn up and the price action started to turn up as well For those of you who are long peloton or been watching peloton They had a big move down yesterday and friday one day You know hitting oversold on the rsi So maybe over the next few days, we'll see what the price action looks like So you want to start to look for patterns You know the channels the the the triangles these are things it's very important to understand how these patterns play out Because they tend to play out the same over and over again So watch for the patterns And and and see how these things play out, you know, just watch it You don't even have to be invested just just for your own knowledge What else twitter? Sort of making the same thing kind of in a down move. I'm waiting to see what the rsi is going to do here Um potential trade possibly for twitter in the near future. Uh, what else do we like cosco? is Killing it mcdonald's doing well pepsi's doing well Facebook i'm not a huge fan of facebook, but it just keeps coming back it gets sold off and it keeps coming back They're having their name change soon I'm staying away from facebook. What else do I have in here? That's really about it As far as the pharmaceutical companies. Let's talk about the pharmaceutical companies real quick Walmart, I love walmart Eli lily so the big news of the week was, you know, the last couple weeks murk came out murk came out with their Pill that they've been testing for covet Instead of being injected with a shot you can take a pill. It hasn't been finalized yet, but the trial results Um, you can see the massive move up was on the news that they've had this pill Now fiser just the other day Came out with their own news that they have a pill that seems to be more effective than murks So fiser got jacked higher and murk. Let me just go back to murk Got dropped first sizable Drop basically took away all the gains it had made on its announcement for the pill I love the the health care sector the pharmaceutical sector We got into a trade on murk yesterday because I still believe in the company it still creates Medicines and drugs that people need not just for covet but for other ailments So when you have this nice it was almost an you know an eight nine ten dollar pullback and murk It was time to jump on board. We were able to sell You know strike prices down here Still a lot of cushion and so we got into a play on murk But you know, it's just it it can be treachery sometimes scary the health care sector. So I like the health care sector Everyone's going to need health care within their lives It's just a sector that is is going to be here for a long time and long term on bullish on the health care sector. All right, so That's about it for today My thing keeps jumping here. Once again sp y s and p 500 getting a little overbought here Oh once let's just look at the vixx real quick So people have been asking me about the vixx this week because I I don't talk about it all the time The vixx moves inversely to the general market as the market moves up the vixx comes down What's the vixx? The vixx is the volatility indicator. It's basically a fear indicator tells you Are people scared or complacent in the market right now And when the market is going up nice and smooth the vixx comes down That means there's you know, not a lot of fear out there And when the market's tanking everyone's fearful. That's when the vixx spikes. This was during the pandemic, right? Everyone got scared the vixx went up. So as the market has been going up lately the vixx really hasn't Um Hasn't been going down. It can't get through this 15 level Much so someone was saying is that is that? Divergence because the market's going up the vixx isn't going down The vixx almost looks like it's ready to pop up again So what i'm saying what i'm thinking here is that you know, we got a lot of greed in the market A pullback I think is necessary and the vixx, you know, the players are thinking the same thing We may have a pullback And the vixx will spike so there may be some people trying to front run this thing a little bit We may see some fear creeping up in the next few days as the market pulls back So yeah, maybe there's some divergence here. We'll see what happens. All right, so We're about 35 minutes in here. Let's try to wrap this up. I like the market Probably a pullback which would be healthy, which would be good so we can just have another bullish run into the end of the year All right, so let's quickly go to Um, here is that's the fear and greed index. Let's go to website smart option seller.com Put selling basics. We're all about put selling here Please download a copy or send me your name and email address in this form here. Get a free copy We'll send it to you and Within this youtube video, don't forget to subscribe hit that red subscribe button in the bottom right hand corner of the video Leave me a comment. Leave me a thumbs up. Let me know this is Quality content for you. I try to put out some good information for everybody And send me an email. I'll answer you I'll answer you. All right. So that's all for me today I hope everyone has a great weekend and a great trading week ahead. Hope to see you back here next saturday This is lee lull signing off