Getting Started with Stock Investing | #3 Part 2 Use SMAs & RSI to Determine Potential Trend Changes

[Music]

good afternoon everyone Welcome to our

getting started with Stock

Investing uh today I'm Connie Hill I'm

happy to have you join me here today you

know the market has maybe done some

changes on us in the last recent little

bit the question you might be having is

well is the trend really changed and

could I maybe have known about the

change before it actually happened were

there some signals and signs we could

look at so we're going to use some of

our technical analysis skills today to

address that question and hopefully give

you a little bit of of confirmation as

far as what is going on in the markets

now I have Lee Bohl in the chat he's here

to help me out and answer your questions

so as you have them go ahead chat them

in this is a beginning level class there

is no question that shouldn't be asked

okay it large or small if you have a

question somebody else may have that

same question now if you're listening to

this on the recording I know lots of you

do when you have a question put your

question in the comment section uh of of

the YouTube all right and we'll go back

as coaches and look at that throughout

the week so you can get your questions

answered pretty quickly there as well

well just a quick hello to to some of

our loyal uh loyal folks here today

we've got Robert Karen Kevin Wy

Riceberg Greg and uh Sim we're happy to

see all of you here well let's go

through our disclosures and then we'll

get down to the fun of things

here so what we talk about today is

intended to be

guarantee future results or success

inves involves risk including the loss

of principle we will be using the paper

money downloaded software here today

there's a web version there's a mobile

version and so this is going to be the

most robust

version that typically you're going to

see us use in most of the classes all

right now I want to give you a quick

announcement here some of you are aware

of these Workshop that are going on and

we have new people joining us all the

time and so you might not be as aware

but we are going to be doing three live

workshops in the next couple of months

two three months and you are invited to

come it's free to you you just have to

show up uh usually we'll feed you pretty

good and we'll have it in a nice hotel

where you can participate and be around

other people that are like-minded that

are learning to trade just like you are

so I highly recommend these events if

you live near the area or if you just

don't mind hopping on a plane and

heading to Chicago or wherever it might

be okay going to encourage you to do

that people absolutely love it now where

can you register to a tent you can see

up here in the address that says

schwab.com

events I'm going to go to the calendar

and show you so let's jump over

there I am at schwab.com and then it's

you can see it says Schwab Das coaching

here and you can see uh kind of by

default when you come in it shows the

webcast as well as Schwab events I'm

going to click off the webcast so that

we're only seeing the events we had a a

virtual Workshop uh workshop last

week Monday through looks like they went

Monday through Wednesday that was a

street smart adedge to think or Swim

we're going to be doing another one

starting on the th but the first one

of these that takes place in Arizona so

here on the

th click on it and it'll kind of give

you some information it's a two-day

workshop it's Friday and Saturday and it

kind of breaks up for you what's going

to be happening on Friday because that's

the technical analysis part the options

portion will occur on Saturday and so

you'll just want to register for the

event

uh maybe you need an email reminder

that's fine as well all right but they

do fill up quickly so if you kind of

have an idea you want to participate in

one of those make sure to sign up pretty

quickly uh just going to check the chat

here real

quick let's see Wy says Anaheim

California in July well I did we meet Wy

in California it wasn't in July I think

we had nicer weather I think it was

maybe like September or something like

that

um why says I can't believe how much

they spend on educating us yeah we want

you to be educated and we are doing all

sorts of things to help you get there

and help your trading I am going to

mention one other thing since we're out

here on the web and that is those of you

that maybe haven't subscribed to the

channel yet do so in the bottom right

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YouTube logo when you do it makes it

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what we're about okay so I'm just going

to refresh this and you can see well you

can't see cuz I scrolled over it we're

here on the trader talks Channel all

right and these were some things that

were coming up before we got started

here so here's our getting started class

and then Monday morning bright and early

right at the opening bell we'll have

Trader talks we have a Trader talk event

every single day of the week all right

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for them all right let's jump out to

think or

Swim I kind of started this with you

know things maybe have changed a little

bit in the last couple of weeks and

could we have maybe known about Trends

changing so we're going to spent a

little bit of time on moving averages

and identifying Trend changes here for a

moment and we're also going to use the

RSI now I have on the charts and I'm

going to just kind of go into my studies

here and show you I have a  which is a

short-term moving average these are all

going to be simple I have a  which is

more of an intermediate moving average a

little bit longer term  very long

term okay so we have all those moving

averages on the screen I added

RSI and really to pull these up to get

the simple moving average if you're not

familiar with it just start start typing

in simp okay you'll see everything that

has an s in it and you can just find the

simple moving average and bring it over

a few times same thing on the RSI just

type it in the search bar unless you

want to scroll down and there you can

see there's our

RSI and when you grab the the moving

averages then you're going to

personalize them and put in what period

we're looking for so I just double

clicked on that initially it comes in at

days and I changed this one to be

all right so as we look at the chart

's down

here  the SPX is getting closer to in

the last couple of days the red one is

the  that's our inmediate moving

average and the shortterm one that blue

is our day moving average and so when

somebody says well did the trend change

it might be well which Trend are you

talking about are you talking about the

short-term Trend you talking about the

intermediate Trend um by and large we're

looking at in most of the classes we're

talking about the intermediate Trend

when we say hey has it changed but it's

always a little bit of a lagging

indicator meaning say for example on

this  day moving average it's taking

the last  trading days all of them

have equal weight so when the trend

starts to change and price starts to

maybe make lower lows and lower highs it

takes a while for this  day moving

average to

react the  reacts really quickly the

uh not nearly as quick as the  but

certainly a little bit fast quite a bit

faster I should say than say the  or

the  so if we look at SPX and I want

some opinion here from you in the chat

do you think the trend has changed on

SPX okay I want you to just the

intermediate Trend do you think it has

changed while you're chatting into

me and let me just see if I need to

cover any questions

here uh shantha says do these online

classes cover classes there

too

um I'm not sure how to answer your

question there because we have these

webcast throughout the week right and

we're really looking at current market

conditions current status of maybe some

of the trades we've been working with in

our different

classes and the content and the

information is similar in the sense that

we're we're talking about technical

analysis and those principles are

General uh for day one of the workshop

day two option principles option

strategies so yeah there is some

crossover but it's kind of like you go

there and you get a good feeling of it

right you get a lot of information in

those two days sometimes you're just

like ready for it to be over by the time

we get Saturday afternoon so I don't

know if that's what you're meaning by

that if I need to be a little bit more

clear please uh tell me

that now Sim says the death cross with

two of the moving

averages uh it can be called that yeah

what is the the death cross it's going

to be when a shorter term moving average

crosses over a longer term uh typically

the one that I think is talked about the

most um is going to be when the

intermediate moving average crosses down

below a a longer term moving average

okay so like a  crossing over a  um

or it can be done with I should say day

okay

uh let's

see did the stop did they stop the :

a.m workshops they had before I'm

returning slowly so I didn't see them

around um  a.m probably for Sim now Sim

are you still in Holland if you're still

in Holland then your time is going to be

way different than how we're going to

report it okay because typically those

those workshops yeah we start at : in

the morning go till about  in the

afternoon

okay so what do you think has it changed

okay so China said

yes uh Wy uh oh you guys are just kind

of having some discussion

here any coming up in the New Jersey New

York

area sha ask we do go to New York quite

a bit I don't know of anything on the

dock we we're telling you the ones that

we have absolutely scheduled and we know

where they're going to be and what but

the days are and the hotel is booked and

that type of thing then we then we let

you know about it uh I just know we go

there

frequently uh as well as say DC we also

cover some Florida areas Atlanta so just

kind of a mix throughout the country in

the bigger in the bigger cities okay

well I'm going to tell tell you with the

SPX that maybe things have changed a

little bit now if you're having a hard

time maybe your eyes aren't totally

getting yet the higher highs and higher

lows you can go back to these moving

averages to help you to determine hey is

is something changing here okay so up

here we have a high and then we have a

second high and they're about the same

this is a few pennies more right this is

a few more points higher but they're

they're essentially the same and then I

would say right here was the previous

low and so when we're looking to see you

know when the market kind of pulls back

did it go beyond I'm just going to use

that same Circle did it go beyond this

previous low and the answer is yeah so

we have a lower low and then if you're

looking at maybe say this candle and

this candle they attempted to rally on

that day it just didn't get very far and

so we've got a couple of lower highs if

we're kind of micromanaging the candles

there a little bit uh and so I would say

yeah the intermediate Med term on the

SPX changed what about the

Dow let me uh change something

here we're going to use a couple of

things let's see the Dow Jones

Industrial

Average is on here H the day has moved

down past the

and it's down below the  so I

would say it's even weaker even though

it was just what still uh March st so

within the month it had made a new

all-time high but yeah lower lows and

lower highs uh the one that uh let's

look at NASDAQ here real quick as well

because it too is pulling back and you

guys have probably noticed a lot of tech

technology stocks have been basically

retracing now I want to talk a little

bit about the RSI and how it can help us

okay the RSI is an oscillator and it

gives us an idea of the momentum and as

the momentum building is the momentum

slowing down and one of the really nice

things about uh the RSI is it can clue

Us in when there's a Divergence well

what's a Divergence a Divergence is when

the price does one thing like making

higher highs and higher lows and but the

oscillator doesn't in fact maybe it goes

opposite and so this is really pretty

evident here on the NASDAQ where we were

seeing these higher highs and higher

lows but down here on the RSI I can draw

a downward trending line downward

sloping line because the highs when we

got a high on the price the RSI we would

expect it to be higher we would expect

it to be doing similar things that the

stock is doing but when it doesn't

that's what we call a Divergence okay so

it's kind of reacting in an opposite way

and so so here where we were getting

higher highs and higher lows but the RSI

was not it was getting lower Peaks that

is a Divergence as a yellow flag that

says hey something might change here uh

but our Divergence can go on a long time

before the trend actually changes and

sometimes it doesn't change but it can

be a little bit of a warning to us that

things are weakening okay so here on the

NASDAQ uh could we have known beforehand

that maybe it was going to be weak

certainly we could have because uh the

this first lower high on the RSI was

back in February February th uh this

one got a little bit lower that was

March st okay so while the price is

continuing to go up it went down and

that's one thing you can look for on

Market indexes as well as your own

individual

stocks uh let me

check the chat here for

questions uh I think that I told you Lee

Bohl was here he was going to help me out

answering your questions so uh let us

know uh Shanta says the RSI show

oversold yeah it shows oversold and

overbought and so if you come down here

see this purple line in the RSI grid

that  Line is if when when the RSI

goes above it we call that overbought

when it goes down below the  which it

looks like it got

uh got to

today uh looks like it got to

okay so once it crosses that 

that then it goes into what we consider

an oversold range and sometimes there's

negative connotations about that oversaw

or overbought oversold and so I want you

to think of overbought as buyers are in

control and oversold as sellers are in

control but then once they kind of go

past those points the  and the 

we're watching to see if any weakness

Creeps in all right like a Divergence

something of that nature uh let's see

what else do we have here okay so it's

out right there at the  and

uh the one index we haven't looked at

yet is the Russell  now the Russell

I would say overall has been a

little bit weak for the last couple of

years and it was nice when it finally

had a nice little run after kind of

being I The Biggest Loser uh for several

months on end and then so it had a nice

little run here at the end of the year

and then it had a nice little run here

the first part of this year in fact it

went back and had a high here at the

over

but the pullback that we've seen

generally when markets fall or pullback

they go down a lot more quickly than

they went up okay there's an old saying

that says uh price or

Trend um we'll say price it climbs

upstairs meaning kind of methodical and

slow but falls out windows right

sometimes it's like boom boom boom and

it's down okay so the the russle  we

can see definitely below the  earlier

this week getting here to the  now

sometimes we'll see bounces at the 

sometimes that can be a place where

value investors are like okay things are

at a bargain we whether it's on an

individual stock or it's on an index and

so buyers can come into the

picture now two weeks ago I showed you a

scan and it was a scan that we could use

for some stocks on our watch list to

keep an eye and see if we maybe got an

entry signal on them I'm going to go to

that scan real quickly I don't want to

BU rebuild it okay but feel free to take

some notes this is the scan we're

looking for stocks over $ we looking

for a PE ratio between  and  return

on Equity at least

% and then we wanted the stocks to

have at least , in volume you

could have a lower threshold I didn't

really mean to change

that so let me fix

it all right , and then we were

looking for Trend we were looking for an

intermediate Trend right that's what 

bars are it's about a quarter and we're

looking for the stocks be % there and

then five or % here and % on a

shorter term moving average time frame

days that's about a month okay so

we're looking for several factors now I

just ran this scan a few minutes ago

let's see get a couple more right now

looks like we have

stocks that came back and the thing

that I found interesting is I thought

well I wonder how this compares to our

list from two weeks ago okay so I saved

that watch list all right uh from that

let's see here let me see what questions

I need to

address oh I like that hazard sign rice

Birds put uh out in the chat yes at

least to me it looks like a hazard sign

okay so I do have a couple of things

here we're going to go to the charts we

have our moving averages we have uh our

RSI section down here and I'm going to

bring up our growth stocks watch list

and I'll show you it

was uh this exact one growth

that was two weeks ago on Friday

when we had our class okay so this is

the watch list on that

day now I'm going to do a little sorting

on it I'm going to sort it by the one

month and I'm going to

start uh at the I'll start at the bottom

okay uh might not be the right way to

sort it I mean it'll be okay I was

playing with it in a different order

than this but uh has the trend changed

here on

Gap now just answer to yourself or you

feel free to chat it in okay but I know

there's a little bit of a from when I

ask you till you actually hear it has

the trend on Gap

changed well it's it's not looking like

it's up here anymore and it looks like

if I were drawing in say a resistance

line we talked about support and

resistance a lot last week if I were to

draw in maybe where that old resistance

was we would expect it to be the new

support and it's looks like it dropped

down below it and it's sitting around

the  so I would say on GPS yeah trend

is probably changed and you might not

want that on your watch list anymore

okay how about MST uh this is micro

strategies you know right when was the

peak here this was on uh March th so

it hasn't even been a month at this nice

little Peak our  day is heading down

short to moving average our 

technically is still going up okay

there's a little bit of a lag before it

gets to the moving average that go out a

little bit further in time but if we

were to say well where was the peak

where the previous Peak where's the

previous low you know I'd say here was

the previous low and up here was the

peak and when it went past this area

here where that lower uh low was went

past it then we're like oh we're getting

lower lows and some people if they're

watching the candles really tight they

may say well this was an attempted run

up here they might say that is a lower

high than up there okay so yeah we're

starting to see lower lows and lower

highs when that happens to maybe a stock

on your watch list then you might say

okay it doesn't go on the watch list

right now it doesn't belong we're only

looking for Upward trending stocks or

maybe those have starting to go a little

bit sideways but still maintaining

higher high and higher lows but those

that have really violated it it's like

no no we're they're off the list okay

what if you're in a trade and the trend

changes has that happened to anybody

before yeah uh and I mean even your

paper trades that you're practicing with

yeah it can happen which is why we talk

about and we're going to get into more

next week about why we decide where we

need to get out when we get in where

it's not doing us any favors to continue

to hold on to it because we don't need

to hold on and ride the whole wave back

right so you're kind of like back to

your beginning point or even maybe in a

little bit of a loss