A Secret Trick for Playing the 200 Day Moving Average
The 200 day moving average is the Grand Daddy of them all. And if you understand one simple trick, the 200 day can tell you an awful lot about where a stock can go. In this classic video (note: the Black Room is now the Pristine Active Trader VTF®), Sami Abusaad explains what gaps around the 200 day moving average mean. He gives you a simple rule that lets you know if a gap will lead to continuation up or down, or if a reversal could be on tap. Every time Sami has violated this rule, he’s regretted it. Also learn why “flatness is king” — unlike the 20 day, you do not want a trend in the 200 day moving average. This is one of those tiny little nuances most traders don’t know about — but which can make a big difference in your P&L. And you can learn it through example from Tesla (TSLA), Vaaalco Energy (EGY), Tellurian (TELL), and more.
Continue Reading -->GLD Going Bullish
Today Sami’s giving you a quick update for the latest in gold. On June 1st he called the bottom on GLD. Now there’s a new pattern setting up that demands your attention. If you missed the train, now’s the time to jump on as it speeds up. Tune in to find out where gold is going.
Continue Reading -->Big Plans to Buy Bitcoin
Last week, Sami gave you three scenarios that could play out in Bitcoin, and a guide on how you could play them depending on where the charts took you. One of those three opportunities came up. Did you play it? Tune in to see how Sami trades went. This week, he’s taking a new approach on Bitcoin. His short term plays are turning bearish. He shows you why, plus how he finds the clues with multiple timeframes. While he sees price drops in the short term, his long term outlook is as bullish as ever. He’s got some huge early projections for where Bitcoin will hit by New Years 2020. Watch now to cash in on the long term trades on the table.
Continue Reading -->The Ultimate Guide to Trading Earnings Season
Do you have an earnings season strategy? Because there’s more opportunity than any time of year. You’re about to find out why. In this super in-depth article, you’re going to understand just about everything there is to know about earning season. And if you’re ready to jump right into trading earnings now, check out Sami Abusaad’s Earnings Engine course. Here’s your table of contents: The Ultimate Guide to Trading Earnings Season Includes: What Is Earnings Season?When Is Earnings Season?Why You Should Care About Earnings SeasonHow to Find Out When a Company Reports EarningsAbout Earnings Report Releases and Conference CallsHow to Find Consensus Earnings and Sales EstimatesHow Earnings Reports Affect Stock PricesHow to Judge Earnings Season as a WholeHow To Trade EarningsA Preview of Sami Abusaad’s Earnings Engine CourseEarnings Play BasicsSami’s Earnings Play Checklist What Is Earnings Season?Before you can understand how to trade during earnings season, you need to understand what earnings season is. Earnings season is when the bulk of publicly-traded companies deliver their quarterly earnings reports. These reports contain a variety of financial information on the business’s performance in the previous quarter, typically including (but not limited to): Balance Sheet Income Statement Cash Flow StatementOther helpful facts and figures, like performance of certain business units and products.Stocks tend to have big movements upon the release of earnings reports because investors make new decisions about each company’s future.An earnings report can make you encouraged, discouraged, or even indifferent about a stock’s prospects. When Is Earnings Season?There is no official earnings season. Historically, traders considered aluminum company Alcoa’s (AA) quarterly reports to be the kickoff of each earnings season, since it was always the first company in the Dow Jones Industrial Average to report. Now that Alcoa’s been removed from the Dow, the new ‘unofficial’ start to earnings season occurs 2-3 weeks after the end of each calendar quarter, when the big banks like JP Morgan (JPM) and Bank of America (BAC) report earnings. Earnings season activity peaks about 2 weeks after that, when a cluster of tech companies like Amazon (AMZN) and Intel (INTC) report. At the peak, over 150 companies report earnings in a single day. Then, the frequency of earnings reports declines for another 4 weeks, upon which earnings season is more or less over. However, outside of the traditional earnings season, at least a few companies report almost every day. This is because some companies have different fiscal quarter and year-ends. For example, Nike (NKE) operates on a May fiscal year, so it does not deliver its quarterly reports during earnings season.Why You Should Care About Earnings SeasonEarning Season action is different than regular market action.Since there’s so much important news being released, stocks bounce around like crazy. And remember, a company’s earnings report can affect multiple stocks. For example, when Apple (AAPL) reports earnings, it has a huge impact on the entire tech sector, and especially its suppliers.How to Find Out When a Company Reports EarningsThe single best way to find out when a company reports earnings is to go to the investor relations section of its website.Companies typically issue press releases with the official earnings date and time.You can also find a company’s earnings date on hundreds of websites including Yahoo! Finance and Nasdaq.com.However, if a company has not yet announced an official earnings date, it will be estimated based on historical norms. These estimates are usually correct, but occasionally, they’ll be wrong.Speaking of historical norms, companies tend to be very consistent with their reporting schedules.For example, Netflix (NFLX) always reports after the market close about two-and-a-half weeks following the end of the calendar quarter. About Earnings Report Releases and Conference CallsEarnings reports are typically posted on a company’s website, and also distributed via press release. Management will then hold an earnings call about 30-60 minutes after the release. An earnings call typically starts with prepared comments from the company’s CEO or CFO, followed by a Q&A session with Wall Street analysts.They tend to last about an hour.You can listen to these calls live, or catch replays after. And several online publishers including Seeking Alpha actually provide transcripts of the calls.Keep in mind that some companies will announce guidance during a call, instead of in the actual earnings release. How to Find Consensus Earnings and Sales EstimatesEarnings don’t just exist in a vacuum.Wall Street analysts from firms like Morgan Stanley (MS) and Goldman Sachs (GS) will forecast a company’s performance based on in-depth research. Investors pay most attention to analysts’ forecasts of the following items: Earnings per share Sales Profit margins Unit salesThese forecasts are then averaged into “consensus estimates” by financial news/data organizations, the most prominent of which are Reuters and Bloomberg. The numbers sometimes differ slightly between them, but they’re generally very close. Like with earnings calendars, These consensus estimates are widely available online. Here’s a section from Reuters’ listing of estimates for Apple (AAPL):Reuters lists the sales and earnings per share estimates by quarter, along with how those estimates have been treding. Traders like to see how a company’s reported results compare with these consensus estimates. But beware — a company can beat earnings estimates and see its stock drop. For example, Marketwatch reported that Johnson & Johnson fell despite strong earnings and guidance: How Earnings Reports Affect Stock PricesThe impact of earnings on a stock price is not an exact science. Here is a small selection of the factors that can impact a stock’s reaction to earnings: Earnings per share (relative to expectations) Sales (relative to expectations) Profit margins (relative to expectations) Product unit sales (relative to expectations) The company’s future outlook (relative to expectations) Comments made by executives on the conference call How much the stock is up or down before earningsAs you just learned, it is not uncommon for a company to beat expectations and fall. And a company can report terrible earnings and see its stock rise? Why? It’s all about expectations (see how many times we used that word), which is related to how much a stock is up or down before earnings. For example, if a stock runs higher into earnings, it signals that expectations are very high. So a strong report may be priced in, reporting in
Continue Reading -->Scott Redler: Low Expectations for Google Pay Off Big Time!
On Wednesday morning, I told Redler All-Access readers that I was looking at picking up GOOGL calls for earnings after it dropped on the DoJ News: GOOGL is lower on the DoJ news. It reports Thursday after the close. It might be worth a look long if it can hold the $1130-$1132 area. I may pick up calls for earnings, but we’ll see. at 9:39 a.m. ET, I Tweeted to my Redler All-Access readers that I indeed got long $1,130 calls. On Thursday morning, I followed up with this message in my RAA Morning Note:: GOOGL: I bought $1130 calls while it was down yesterday. Expectations are very low. It needs to get and stay above $1160, and $1200 wouldn’t be out of the question, assuming the report is better than expected.And Thursday after the close, GOOGL did indeed deliver, sending the stock up huge today. The options closed at $31.50 yesterday, and opened at $100.88. In actual dollar terms, that’s a gain of $6,938 per lot overnight. Here’s the chart of the options:I sold my calls right after the open today, when GOOGL was around $1,230ish. I was a little early, because GOOGL got as high as $1,268.39 to fill a big gap! But, I’ll take what I got. The lessons here are simple: 1) I only take options into earnings because my risk is defined. Yes, the risk can be high but I manage it through my position sizing, and I’m willing to live with the consequences. 2) Sometimes, a negative news event can be a gift. Expectations for GOOGL were already low, and the DoJ news took them even lower. So what’s next for GOOGL? As you can see on the chart below, there’s still a long-term channel building.There might be an opportunity to buy the stock soon, but I’ll wait to see where gap support ends up. P.S. Want my complete guide to moving averages? Click here to check it out! Positions Disclosure: As of July 26, 2019 at 10:10 a.m. ET, Scott J. Redler was long SYMC, TWTR, AMD, ETSY, LK, BAC, AMRN calls, UBER calls, GWPH calls, GLD calls, DIS calls, AMZN calls; is short NFLX, GLD calls, DIS calls
Continue Reading -->Take Your Swing Trades to the Finish Line
Sami’s last lesson gave you a behind the scenes look at the tools that help him streamline his scanning process. Today, he’s reviewing his method for scanning the charts as effectively as possible. Remember: once you learn how, you’ll have to practice to get fast. Maybe one day you’ll pass Sami’s 3 chart per second average! But, once you flag your potential plays, what do you do with them? Today’s lesson breaks down how to take your swing trade all the way to the finish line. Sami’s strategy uses the dailies and hourlies together to pinpoint an ideal entry point. Every potential play gets this treatment, and the ones that make the cut get onto the favorites list. If that sounds simple… that’s because it is. Once you know the rules, mastering the game is a piece of cake. Learn Sami’s lesson today:
Continue Reading -->The Ultimate Guide to Moving Averages: Trend Analysis the Pro’s Way
Moving averages have been a mainstay in my toolkit since I began my professional trading career in 1999.Moving averages help me determine:How aggressive to be with my portfolioWhich stocks I want to be long or shortJust how strong the current market trend isWhat news matters, and what doesn’tIn terms of importance, I rate moving averages above news, economic data, earnings, and just about any indicator you can think of.If I was a beginning trader looking to build my net worth, moving averages would be my #1 focus.And through a series of helpful case studies, you’re about to learn:What a moving average IsHow moving averages are calculatedThe specific moving averages I use, and how I interpret themThe biggest myth of moving averages Editor’s Note: If you’d like a downloadable and printable PDF version of this article, please check out The Ultimate Guide to Moving Averages. Click here to learn more ==> What Is a Moving Average? How Are They Calculated?Let’s talk about how a moving average is calculated.A moving average is a stock’s average price over a certain time period.We’re going to focus on the daily time frame this article. A daily moving average is the average of a stock’s daily closing prices over a specified number of days.(a weekly moving average would be the average of a stock’s weekly closing prices over a specified number of weeks)For example, the 50 day moving average is a stock’s average closing price for the last 50 days.Every day, the newest closing price in the moving average replaces the oldest, which is why we call it ‘moving’ — a moving average change every day.Here’s a simple chart of Apple (AAPL) with its 50 day moving average. The Biggest Myth About Moving AveragesYou may hear people say things like “moving averages don’t work” or “everyone sees the same moving averages, so they have no value”But here’s the reality: most serious technician understand that a moving average is not the same as a trading strategy or even signal. I don’t buy and sell purely because of a moving average.But moving averages do help me make decisions. They’re one piece of the puzzle.That’s why they’re so valuable to me.Simple vs. Exponential Moving AveragesThere are 2 types of moving averages — simple and exponential. They are calculated in slightly different ways. A simple moving average is a straight average of the stock price. An exponential moving average gives recent prices a bigger weight, so it does a better job of measuring recent momentum. Here’s Nvidia (NVDA) with its 50 day simple (blue) and exponential (pink) moving averages.You can see they’re pretty close, but the exponential (pink) is a bit closer to the current price.The Moving Averages I UseTraditionally, technicians and traders have focused on the 10, 20, 50, and 200 day simple moving averages.You can think of them in these terms:10 day simple moving average: very short-term trend20 day simple moving average: short term trend50 day simple moving average: intermediate trend200 day simple moving average: long-term trendI use a slightly different set of moving averages in my own trading, and in Redler All-Access.8 day exponential moving average: very short-term trend21 day exponential moving average: short term trend50 day exponential moving average: intermediate trend200 exponential moving average: long-term trend(I matched the colors on the names with their colors in the charts below.)I use exponential moving averages because they are more sensitive to the recent action, and give me a slightly better read on the near-term trend.Going forward in this article, all moving averages are exponential.Is There a REALLY Difference Between an 8 and 10 Day Moving Average?You may be asking “why the 8 day? Why not the 10 day?”In most cases, they’re not terribly different, as you can see on this SPY chart:But here’s what most people miss about moving averages: It’s not the exact moving averages you use that counts.What matters is how well you use those moving averages to help you manage risk.As I’ll soon discuss, I pay most attention to the 8 and 21 day exponential moving averages. I stick with those because my brain is trained to judge the action based on those time frames.If I was using, say, the 10 and 20 day simple moving averages, I’d probably end up with the same results — I’d just get there in a slightly different way.The Power of the 8 & 21 Day Moving AveragesTraders often ask me why I talk about the 8 & 21 day exponential moving averages so much. Whether you see me on CNBC, Twitter, or the Virtual Trading Floor®, odds are you’ll hear me me talking about them.Stocks that are in uptrends find support at the 8/21/50day. Stocks in downtrends get rejected at them on Bounces. Below the 200day is real selling. Rules to live by— Scott Redler (@RedDogT3) November 14, 2018 It’s because these moving averages are the most accurate short-term road map I’ve found.And I value moving average more than any other analysis I see out there.8 & 21 Day Moving Average Case Study I: The ‘Overvalued’ Beyond Meat (BYD)In mid-2019, Beyond Meat (BYND) was one of the hottest stocks in the market, and we focused on it heavily in Redler All-Access.This stock was very controversial, and I bet you saw plenty of headlines like this:But let’s look at the chart.What were the 8 & 21 day moving averages telling us?They were telling us the trend was strong. As you can see, it never even touched the 21 day! And most of the time, it was above the 8 day. This is a perfect example of a powerful trend. Even if you’re not long a stock like this, resist the urge to short because you think it went too far. Because if a stock goes from $46 to $200 while staying above the 8 & 21 day moving averages, there’s no telling how high it can go. A stock you think is overvalued can easily become more overvalued. So I never, ever short a stock that shows momentum above the 8 & 21 day moving averages. NEVER short a stock that shows momentum above the 8 & 21 day moving averages
Continue Reading -->Bitcoin: When to Buy Again, and Why
Want to trade Bitcoin? Sami Abusaad’s here with his Bitcoin game plan for this week. Last week, Sami said Bitcoin could pull back before shooting up hard. But Bitcoin was stronger than expected, which shows you just how bullish Bitcoin is right now. Traders just keep buying at support. So with Bitcoin back at $11,000, what do you do now? Sami lays out three scenarios for trading Bitcoin. Two of them are plausible. And one is not. But Sami is perfectly fine with any of them playing out. See the specific price levels for each of the three scenarios, and where Sami wants to take action.
Continue Reading -->How to Swing Trade a Tired Market
Microsoft (MSFT) gapped up Friday before selling off hard. This doesn’t mean Microsoft is a mess. But it does mean the market is tired. See how that’s playing into Sami’s swing trading strategy this week: It’s time to take things day to day, unless Friday’s bar gets negated quickly. And with so many companies reporting earnings this week, things will get even more confusing. Sami then takes you through the names on his swing trading watch list, including ABT, AMRX, DF, LK, SIG, BCRX, EBAY, PINS, and TTMI. P.S. Click here to check out Sami’s latest Bitcoin update
Continue Reading -->How to Scan 1,400 Names in Under 45 Minutes
Sami’s focus today is to teach you to scan for swing trades as efficiently as possible.But first, he takes a look back at the main patterns you’ll be scanning for. Hint: every single pattern he’s going to show you falls into these categories, so you’ll want to make sure you understand what you’re looking for. If you need a refresher on breakouts and pullbacks, now’s the time to catch up. This lesson kicks off with a behind-the-scenes look at the tools that let Sami streamline his scanning process. Free platforms get the job done, but he sees investing a little pocket change per month in a more advanced system as one of the key components of his success. He’s averaging 3 charts per second, and so could you with the right tools. If you’re short on time, this could mean a big boost in your productivity. That’s how he rips through 1,400 tickers in under 45 minutes – don’t blink or you’ll miss a potential winner. But, that’s just the start of it, One you can master that, your success depends on sorting and prioritizing. Sami helps you understand what you’re looking for in the charts, plus how each timeframe plays into your overall strategy.Don’t miss this gamechanger: P.S. Earnings Season is still going strong. Be sure to check out this FREE Earnings Season resource: The Ultimate Guide to Trading Earnings Season
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