Strong start, weak finish. What's next? | Mike Follett | 6-19-20 | Market Week in Review

https://www.youtube.com/watch?v=zPQD5wGldsA

[Music]
so
about now testing testing testing
that’s super weird the i guess the
microphone
driver or something got disconnected i
think we’re good now though
um it’s unfortunate because i had some
really
hilarious things to say to open the
session here
but i think we’re good now with the
audio and just for everybody’s
enjoyment i’ll bring the video back too
because
why not uh anyhow uh this is mike
fallette
sorry about that uh opening there and
now that we burned four minutes out of
this
um i appreciate your patience and
sticking with me by the way
i’m on twitter mfolet underscore tda is
my twitter handle although i’ve been a
slacker on it this week
james boyd is also on twitter you can
check out james james
do me a favor and just go ahead and post
in your chat box
uh or post in the chat box what your
twitter twitter handle is although i
think james
is one of our most popular coaches uh in
terms of uh
folks following him on twitter he’s got
a lot of great content
all right let’s hit some disclosures and
then i’ll explain
what we’re doing today so options are
not suitable for

all investors and when
you’re dealing with complex strategies
uh well there’s multiple transaction
costs involved so just be aware of that
and also complexity
and uh well uh we will be looking at
various forms of analysis today
you know we’re not endorsing any
particular uh type
futures and futures options is
speculative and it’s not uh
suitable for all investors so just make
sure your risk is understood there
before you get started trading
there’s a quick look at uh your
transaction costs that you might be
encountering when you’re trading and so
just be aware of the impact on returns
that those might have probability
analysis is no guarantee
of an outcome what happened in the past
is not guaranteed to happen in the
future
also any dividends things like this
there they could all be discontinued so
be aware of that
i already mentioned the back testing but
in a paper money account which is what
we’re going to use today
uh we’ll do that for educational
purposes only and if you are a wizard
with paper money just remember
that uh you know jumping over to a live
account market conditions
change and your results might vary notes
listing no recording and no taking
pictures
and by the way it’s good to see you out
there um a bunch of names out there i
won’t
bother listing everybody but uh i’m glad
you could join me today i appreciate it
and um hopefully this is better than a
session
on facebook or tick tock no just kidding
uh actually uh facebook we are on
facebook i believe um uh simulcasting
this so that’s actually
very cool and really what i meant to
imply there is that
you know you’d rather work on your
education financial education
than other things and i appreciate that
um
that you’re here to do that so let’s
start with um
actually let me show you this um right
here let’s start with the indexes today
um and with the indexes i i want to take
a look at a couple of uh
not really indexes but they’re different
types of assets
that are actually gaining some strength
this week one in particular which
could actually be an ominous sign for
the regular equity markets but we’ll see
how that shakes out
also i want to take a look at some
stocks that are on the move
and also you’re going to see that the
sectors where those stocks are
are actually uh the sectors that uh or
the sector that seem to be the hottest
this week and what i’d like to
demonstrate as well is if um
if you’re interested if you’re getting
used to the idea of tracking sector
performance especially for the entire
week you know what’s strong what’s weak
there are ways that you can use the td
ameritrade
website uh it’s very simple ways but
there’s a couple of things you have to
click on
to find stocks that might be driving the
performance of those sectors so
it could be very useful and we’ll cover
that and also we got to talk about the
economic data that happened this week
because there were some things that may
be throwing a bit of fear into the
market some positive and some negatives
and also next week there’s some pretty
important data coming up
as well so let’s start with the indexes
i’m going to jump over to
a paper money account and that’s what
you’ve got on your screen right now
and uh as we’re on uh these
uh charts i’m gonna switch this over to
the indexes
and as as we’re looking at these indexes
uh just for everybody’s understanding
these are futures futures for the
s p the nasdaq and the russell 2000
uh these are just futures that represent
those indexes
and do you remember if you were with me
last week and i’ll go ahead and zoom in
on this one right here and just maximize
that we had talked about
after that fairly gnarly uh sorry about
the surfer talk there but a fairly
extreme move to the downside
that we had last week and there was a
fair amount of fear
that was entering the market the vix had
had a pretty big move higher
we talked about how quite possibly there
could be some levels of support
and potentially some levels of
resistance and one of the areas of
potential resistance if the market may
be
found a bid and rallied higher here
might be
somewhere in the neighborhood of around
50 percent of this big down candlestick
and it’s kind of interesting that it
seems like
after the market started strong this
week well
guess where it got it got to about 50
percent of the way
through that big bearish candlestick
right there and has kind of turned flat
i wouldn’t say that this uh price action
for the last three days now is
necessarily
bearish it’s just neutral right if
you’re wondering about the types of
candlesticks those are
those are called uh like spinning tops
and dojis things like this
we get some intraday volatility but at
the end of the day
you’re just got a market that’s op
that’s closing pretty close to where
it’s open and that just means that the
bulls
and the bears are fighting it out and
it’s considered very much two-sided
trading
but next week you know based on data
that might come through
or maybe optimism or negativity
about the virus that could have an
impact as well on whether these markets
bounce back down
or rally higher but you know that’s very
short term
certainly if you step back and you look
from the top of the mountain so to speak
or take a more zoomed out view here
uh these markets are still up trending
and this is one of the stronger bull
markets that you know
off the bottoms anyway uh that uh that
you know many traders have ever seen
before
anyhow there’s the s p 500 uh let’s move
forward here
the nasdaq was a little bit stronger it
was able to clear that 50
cent hurdle or that 50 percent hurdle
of that candlestick from last thursday
however now we’re getting into these
all-time highs
and that could be potentially you know a
cause for
investors to think about their
allocations and maybe pause on the buy
side here but certainly not weak
necessarily just two-sided trading
getting really close to these highs on
the nasdaq but some traders
when they see a market after a move like
this
challenging these previous highs some
traders might expect
some volatility to be coming now it
doesn’t always happen
but when you line it up against a wall
like that so to speak
um you know often times especially with
you know sentiment moving around the way
it is right now
you know traders will expect either a
breakout move higher
or a bounce down coming now we don’t
know which way
but that’s sort of the way the markets
are setting up right here
uh let’s move over to the russell 2000
russell 2000
um it’s resting at about 50 right now
of that big move down that we had last
friday so uh the price action there
actually of of the indexes i think the
russell was actually the strongest
this week and so that’s that’s actually
optimistic for the bulls
because that’s the small cap index
there’s more volatility there
they’re smaller more potentially growth
oriented companies
maybe a better representation of risk by
being on or off so to speak um
speaking though of even though the
russell was stronger here and this is
where i’m going to transition
we’ll talk about some of these other
areas that some traders will watch
i’m going to switch over and take a look
at bonds for a minute
because uh you know hopefully by now you
know
you’re getting your sense for technical
analysis a little bit
and how to analyze trends and um
just so you know if you want to learn
more about technical analysis and trend
analysis
you might want to check out some of our
technically oriented classes in fact
cameron may on tuesday tuesday morning
he does a class that’s called the
introduction to technical analysis
or no excuse me getting started with
technical analysis
and he can help you kind of learn about
some of the basic concepts
regarding what to look for on the charts
but i’m going to take a look at this
30-year bond
future now this is a future that tracks
bonds
uh bonds uh there’s there’s a number of
durations here what i’m looking at
though is the 30-year treasury it’s the
long
uh treasury sometimes this is called the
long bond and this is the price
for it just through the eyes of looking
at the futures market
now if you’re getting used to trend
analysis what we’ve seen here
evolving is is a downtrend over the last
really since middle of november here uh
when we’re looking at these 30-year
treasuries
something that might be forming that
some traders
could have on their radar is the fact
that yes although we have these lower
highs
and that’s an indication of a downtrend
well a downtrend is also confirmed by
lower lows
and what we might be seeing right here
is maybe a
higher low forming in bonds see that
and this is the long bond this is uh
considered many traders look at this as
if people invest in this this is very
much a safe haven
somewhere they might go if they want to
defend themselves a little bit from the
risk or
volatility that might be part of the
equity market
interestingly enough these long bonds
are starting to show some some real
strength here
and this started to build after the fed
you know got to work last week with the
announcement
and they started talking about weak
economic activity
for some time in the future we’ve
actually started to see
maybe some capital moving over into
bonds
now that could be capital moving to a
safe haven
it’s not confirmed and we don’t know yet
but if you’ve got something
maybe to have on the radar for the next
week and i’m not recommending this right
but some things that traders might be
watching
is what happens with the trend on these
bonds and if we break through
kind of the series of lower highs and
we’ve got that higher low
sort of already in place that could be
an indication that more money is flowing
into a safe haven and that could be
weakness for the market potentially
so something for you to watch and this
is a change that has started to occur
just over the last week see why it’s
important to go back and look at the
price action from the previous week if
you haven’t built a weekly routine yet
some things to look at on a weekly basis
to kind of keep you updated on what’s
happening in the market you might
do it you know and it might make sense
to start by building a watch list
and and some spots where you can view
some of these major indexes and some of
these different assets and you know
nobody’s expecting you to be a macro
economist i’m not for sure
i’m an idiot in a lot of ways when it
comes to this but if you can start to
recognize some of the changes
when you’re talking about money and
capital moving around in markets it’s
moved by institutions
and it’s kind of like a spider web so to
speak where you flick one side of the
web and there’s reverberations on the
other
and it’s kind of like you know the the
market web of
of money movement and what you know some
traders do is they try to track
what changes might be taking place in
terms of
money moving around in markets and
that’s one of the things that is sort of
interesting
now uh moving on from there in fact uh
just for fun if you want if you’re
interested in
learning how to trade these bond futures
i did a class this week called
leveraging capital with futures
it was yesterday and i did an example
trade of a
short put vertical spread on these
30-year bonds
it’s just one way for somebody to to use
a defined risk trade so in case
this goes against them they don’t have
you know
you know huge unlimited amounts of risk
it’s defined risk
but also a high probability and
something to maybe offset
in case these bonds do go higher so
anyhow i did that yesterday and it’s in
the archive session
and i believe the title references bonds
okay
another area of the market this week
that was strong
was energy and it’s interesting because
energy we’ll just zoom in on oil here
oil’s gotten right back to the high
where we were
just about a week ago and boy we’ve come
a long way
since uh since uh kind of the bottoms
here
i don’t know if you remember but uh the
may contracts actually went into
negative prices
because of this extreme uh backwardation
that appeared
in markets uh but things have very much
kind of straightened out from there and
this is kind of an indication of
possibly lower uh you know maybe lower
supply
of oil and whatnot or you know more
potential demand coming on optimism
potentially about economic recovery
one thing that was sort of interesting
this week is some analysts
and notably today one from jp morgan was
interviewed
and put actually 100 a barrel oil
on the table and they hedged it you know
with their language but
you know oil’s been so strong that now
we have some analysts that are calling
for
just huge moves higher now one thing
that
some traders might look at is the fact
that we’re actually
back here at that fairly significant
last high it’s going to be interesting
to see if oil actually marches on
or pulls back and some traders you know
trying to bring this all together
if there’s a pullback in oil and a rally
in bonds
that could be a recipe at least in the
near term for
uh you know weakness in equity markets
so again just another thing that some
traders will look at
for trade ideas and possibly a better
understanding
of what might be happening in broad
markets now switching gears here i’m
going to take a look at some equities
this week some up equities and also some
down equities this week
uh so let me just switch over to my uh
very creatively named single chart here
on this grid and um
some stocks that were up today that
maybe you’re a little bit less familiar
with i think this was one of the top
performers of the entire week but bmrn
uh biomarin pharmaceuticals and they’re
actually finishing
the week super strong uh right now it
looks like uh
they’re right near their high of the day
and they got as high as 120
and right now we’re at 119.98 so a lot
of strength there
and they got some analyst upgrades uh in
addition to that there’s some positive
news about some of their uh therapeutics
that they’ve got going on
for um for blood treatments i think
uh also another big mover and actually
there were a number of them from this
particular sector
but another one was sgen
this is seattle genetics not quite uh
you know depending upon how you look at
things maybe not quite as overbought
as uh biomarin but positive news there
on some of their uh therapeutics and and
progression and some of their
phase trials for drugs on uh actually
tumors
with these guys but very strong
finishing
out the week now on the other hand
there’s definitely some weakness out
there
for example some of the stuff that
individuals are wondering why they’re
going up like cruise lines
rcl actually you’re finishing things out
this week
on kind of a negative note and this was
one of the
more negative areas of the market this
week in fact
um if you take a look at some of the
price action here
this maybe isn’t in the best spot with
rcl
but uh if you’re getting used to uh
candlestick analysis
uh what we’ve got here is kind of a
bearish looking engulfing candle
where the price action actually opened
higher
than this green candle from the
yesterday
and then close well we’re not closed so
i better not jump the gun here
but if we close uh where we are now
we’re going to close below the low
of yesterday’s candle and that is uh
that can be a little bit of a bearish
sign
now honestly traders do like to see that
kind of a candlestick
after the stock has made an up move
which the stock has not
but this is one of the areas where there
were weakness where there was weakness
you know travel
especially crews i mean i don’t know if
any cruise ships are even moving out
there
and so this uh anyhow this sector’s
coming under pressure
ccl is another one also airlines
ual that one is uh showing some
fair weakness uh closing out the week
here very similar price action
to uh to the cruise lines so anyhow um
who knows maybe uh that could be some
continuation setting up for some
bearishness in the future
um so there’s strength and there’s
weakness for sure
and by the way um just shifting gears
again
uh if we’re thinking about where we are
within our agenda
let’s move over and talk about some of
these how to find
maybe some of these stocks that are
driving sector performance
and while we’re at it we’ll just talk
about you know we’ll use some of the
tools that i showed you last week
on the td ameritrade site that would
allow an individual to actually
track the sectors you know see how the
individual sectors are actually
performing
so let me just shift over to td
ameritrade here
and the first thing i need to do is
clear my annotation tool
and if you go to um td ameritrade.com
that’s where i am right now
logged in and you don’t you know this is
not a paper account this uh this is what
it would look like in a live account
but what you do is you go to research
and ideas and
if you look in this area called sectors
and industries
just left click that and this
is going to show us well maybe it’s not
going to load
for me i shouldn’t have uh updated that
because there we go um there we go we’ll
go one week performance here anyhow when
you go to sectors and industries
this is actually going to show us using
these bar graphs
the sector performance on the week sort
of compared to the s p
500 actually by default it’s going to
show you on the day
which for some reason that’s not loading
but you can choose different time frames
and you can go with the weak for example
now it’s it’s interesting that some of
these biotechnology
companies you know health care related
companies that i just
mentioned were at the top of the strong
stocks list this last week
well i guess it’s not a huge surprise to
see health care in general
at the top of the list as well health
care up about three percent
on the week energy actually
one of the weaker ones in terms of the
stocks although uh
the actual commodity itself is is was
very strong this week
but there you can kind of see the sector
performance in different time frames
now we’ve already talked a little bit
about health care but let’s say we were
looking at for example industrials here
and let’s say an investor were wondering
what stocks
or what sub industry groups might be
driving that sector
for industrials well one thing you could
do is click on the
title of the sector that you’re looking
at this is sector level
if you wanted to drill down and look at
stocks or
industries within this sector uh there’s
actually a process here that makes that
fairly easy
so for example uh when you scroll down
a little bit you’re actually going to
see the
industries that are within that
particular sector it’s just going to
just line them all up down here
now this is just going to give you kind
of an overview of which ones are kind of
the biggest ones
within that industrial kind of complex
there
but if you wanted to you could actually
there’s a tab here labeled performance
and when you click performance what you
can do especially if you’re looking in
the short term just the last week
you could actually click this short term
sub link here
and this would allow you to see well
this week if industrials were up
well which part of the industrials were
actually the strongest right
what what they call industry group were
the strongest within the sector of
industrials
and you’ve got the one week the one
month three month and three and six
month view here
and for example you can see here that it
looks like air freight and logistics
up about almost five percent this week
and scrolling down from there
well you can see that some of these
others building products was fairly
strong and
kind of across the board airlines were
weak we already talked about that in
transportation infrastructure
is weak but the rest of these are pretty
strong now let’s just say
an individual were interested in air
freight and logistics they wanted to see
what stocks
were driving this sector excuse me this
industry within that sector
what you could do from here is click on
the name
of the industry just click the industry
name
yeah my one day had a problem there too
but when you click that industry name
and then you scroll down from here what
this is going to show
are is a list of the stocks within that
particular
industry group and the way these stocks
are being displayed here is based on
their market capitalization so you might
think hey these are going to be the most
liquid
that are near the top but what you can
do from here
is also if you especially for those of
you that like to kind of get a sense for
the overall
chart performance and relative strength
of the
underlying you can actually see a little
chart here off to the side it might be
kind of hard to see
in this uh format that i’ve got right
now
but it’ll kind of give you a sense for
how these stocks are currently
performing
and we have seen some strength this week
from fedex we’ve seen some strength out
of ups
the zto it looks like it has been pretty
strong the entire time
but it this gives you a list of of the
largest cap stocks within that industry
and then potentially this can help you
understand which stocks might be driving
uh you know the indexes or that industry
so for example if you wanted to go from
here to ups
i’m actually switching back over to
thinkorswim strong week
in ups you can see it now it did sort of
flatten a little bit with the rest of
the market
but some traders might be noticing that
there is
a higher low that’s formed higher than
that previous low
and we don’t know whether it’s going to
go back and reach this previous high
but sort of a foundation or a formation
here of a new
kind of uptrend here in ups you know
we’ll have to see if it carries through
however this could be an interesting way
for some traders
to kind of carry through and see if they
can find you know individual stocks
that may have performed well this week
and the whole point might be to get some
of those stocks on the radar
uh for individuals for the next week
that’s upcoming
so uh anyhow just to remind you of that
process
of uh what i did to to arrive at those
stocks
uh you start with uh it’s it’s like
drilling down right or looking into a
funnel
you start with the big end which is the
sector first
and then you look a little bit deeper
into sub industries which is more of a
narrow group
and then eventually come out the other
end at individual stocks
but you start with research and ideas
sectors and industries
and yeah i don’t know why that one day
is not loading right now
uh it was loaded before i reloaded it
maybe we broke it collectively as a
group
but it looks like the one week is here
um
and uh anyhow once you’ve found your
sectors if you want to start drilling
down just click on the name of the
sector
scroll down from there and that’s where
you can get into the performance
tab of the industries once you found the
industry that you’re interested in
just click on the name of the industry
that’ll take you to the stocks
okay so uh it’s it’s there’s some useful
stuff here
on this tab since we’re using td
ameritrade right now as well i mentioned
i wanted to talk
a little bit about some of the economic
data that happened this week
uh remember here within td ameritrade if
you just go to research and ideas
there is a calendar which shows us all
kinds of things
uh from earnings all the way over to
economic events
and this can be a very useful tool for
people to use
uh one thing that’s uh kind of fun to
look at as well when you’re on this page
is uh it can actually give you a list of
uh you know
earnings results and things like this in
fact it was kind of interesting i went
through
uh last week just to find out what the
earnings results were
from uh individual stocks last week and
in total from the earnings that were
reported last week some of them
they don’t get reported or the service
isn’t able to pick up whether the stock
beat or
or missed on their earnings but last
week on earnings there were 17
companies that beat their earnings
announcement
and there were 19 companies that missed
on their earnings i just kind of went
through and counted them all
up through the week so that’s a little
bit different than what we have seen
especially in the early part of the
earnings cycle from this last earnings
season
we actually saw surprisingly a number of
companies especially on the technology
end
that were beating but right now
interestingly enough
of the companies that we were able to
get reports from
this last week more companies missed
than beat
so could that be a reason why these
markets
are flattening out a little bit right
just trying to think in terms of things
that
could be uh coming together that might
cause some anxiety for investors i mean
after all
why do people buy stocks well it’s
because of you know hopefully they’re
going to share in the earnings of the
company
either through stock performance or
dividends
but anyhow that’s a major driver
but you know i don’t want to spend all
my time on that i digress on that
remember we’ve got this economic
calendar just go to economic events
and you can see how the uh economic
activity
uh panned out for the week and also you
can take a look
by clicking these different calendar
days for what to keep on your radar the
week ahead
just to sort of summarize from this last
week there was some good
and there was some bad uh manufacturing
had some strong numbers this week uh
which could
bode well for the prospects of economic
recovery and optimism that way right
retail sales this week last tuesday
retail sales came in
surprisingly strong which might suggest
that the consumer
at least they’re still buying stuff of
course are they buying stuff with the
feds money or with their
well it both right i don’t mean to make
light of that but
there was some surprisingly strong
manufacturing
data and sales data that came through
but one of the big flies in the ointment
from this last week
which traders might have on their radar
to keep watching
in the weeks ahead is every thursday we
get this continuing
unemployment claims number coming out
right
new new unemployment claims and
continuing claims
and it’s just interesting because uh
this is last week’s data but
we we actually were uh came in higher
on unemployment claims than the
consensus it was
pretty much a negative surprise right
although the numbers are coming down in
terms of claims overall
right um the rate of the decline is not
as fast
as what some traders uh have hoped and
economists have hoped
so that could be you know last week we
talked about the markets are a little
bit
right now like you know a toddler or
whatever how old do kids ride
bikes now my grandson actually
my daughter bought him a motorcycle
electric motorcycle
the kid’s two years old actually just
turned three a couple of weeks ago
and he’s riding around too a two
two-wheeled electric motorcycle
so not all kids use training wheels but
the market reminds me
of being on training wheels right now uh
it’s been
it’s been propped up but can you remove
those training wheels
right and as those re those training
wheels come off is the market going to
be able to sustain itself
and so that’s part of what people are
watching there’s some good
and there’s some bad out there now next
week
just so you know there’s a lot of
information coming through
early in the week on housing
existing home sales new home sales
but the day that we have the
unemployment
uh data from next week the the result of
this week’s actually unemployment claims
that’s going to be on thursday
and that’s going to be a big day so that
could be one to watch
there’s also information about durable
uh goods and durable goods orders that’s
very much a leading kind of area of the
market
leading indicator there and also we’ve
got gdp numbers that are coming out
on top of more information on those
initial claims so those are some things
to watch
potentially next week as well so again
kind of a mixed bag out there and i wish
you know there was more clarity and
there’s always
uncertainty i mean it wouldn’t be
markets without some uncertainty but
right now
there is kind of that mode of where the
market still seems to be
or traders still seem to be wondering
you know how we’re going to do as the
market tries to
lose the training wheels so to speak and
also
you got to keep your eyes peeled on any
uh innovations
on uh therapeutics for the virus as well
that could be
a total game changer but that will
complete our session for the day
we’ve looked at the indexes we’ve looked
at sectors and stocks
that might be driving those sectors and
also economic data
but uh i’ve been yapping at you now we
got that late start i apologize for that
um i don’t know what happened with uh my
microphone here but i had to
go through a process of getting it
reconnected the driver in there
and it started but anyhow thanks for
your patience everybody
have a terrific weekend thanks james
boyd
out there as well uh for helping out
with the chats
and um anyhow hopefully we’ll see you
next week in our education
we’ve got a lot of it coming your way
next week through webcasts and of course
you can
learn more in the education center uh
just
you know by doing self-study as well
right there’s your final disclosures
and i’m signing off for now have a great
week everybody
and we’ll see you next time goodbye
you

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