Getting Started with Technical Analysis | 8-20-24

Hello, everyone, and welcome to Schwab Coaching. My name is Cameron May. I' m a senior manager here at Schwab, and this is Getting Started with Technical Analysis. You know, every week at the launch of the webcast, I always say I' m excited for this topic, and today I' ve got to say I' m particularly excited because the last time I addressed the indicator that we' re going to be discussing today, it turned out to be the most popular video I' ve ever done on YouTube, and that' s been more than a decade of doing these things. So I' m really looking forward to talking about trading using the market forecast tool on Thinkorswim. It can only be found on Thinkorswim.

So I' m going to talk about how it' s built, how it might be used for planning and placing a trade. Should be a great discussion. Before we get to that, though, let me first of all say hello to everybody that' s out there in YouTube land. Hi there, Ricebird, Marisolago, SGAS, Photography, David, Robin, Muhammad, Jeff, Michael, Vanessa, Life in the Fast Lane, Greg, Lola, Vanessa, everybody else. Thanks for joining us week after week. We always appreciate your attendance, your comments. We appreciate your contributions here. And if you' Here for the very first time, I want to welcome you as well. And if you' re watching on the YouTube archive after the fact, you' re just watching the recording of this broadcast, we' ll enjoy the presentation, but be aware that you' re invited to join us in a live stream if you' d like to be here.

This one kicks off at 2 o' clock Eastern time on Tuesday afternoons. We' d love to have you here. It' s a great place to come and ask questions in a live format or environment. And speaking of that, my very good friend, long-term colleague, Brett Crowther is going to be hanging out in the chats with us today. Brett' s going to be answering any questions that I can. To just get to it during the natural flow of the presentation. As long as they' re on topic, Brett' s there to pick up the slack for me. Thanks for being there, Brett. And Brett and I would also like to issue an invitation to you. If you' re not following us on X, please do that. It' s a great resource.

It doesn' t cost anything to connect with your favorite presenters there on X. So at Brett Crowther, it' s a great resource. You can find me there at CameronMayCS. All right, but as we get into this, of course, we need to pause to consider the risks associated with investing and trading. Risk is real. So this is important information. The information here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Investing involves risks, including the loss of principal. Schwab does not recommend the use of technical analysis as a sole means of investment research. And any investment advice, any investment decision you make in your self-directed account is solely your responsibility. Okay. All right.

So as we go to discuss the market forecast tool or indicator or study, whatever you want to call it on thinkorswim, chat in, let me know, is this familiar to you? At least to some extent, have you, have you heard of the market forecast tool? Or maybe have you traded it in your paper money account? Just chat in a yes or no. If you' re, if you' re familiar with the indicator, but I, I happen to know that, uh, this webcast is going to seem to be seen by hundreds, if not maybe thousands or tens of thousands. So I want to make sure that I go at a pace that everybody can follow. So the first thing that we' re going to do today is, uh, is add the indicator to the chart and talk about how it' s constructed.

It' s going to be a very high level, very basic discussion of how it' s constructed. Then we re going to talk about how it might be used. We' re going to start with applying it to an index. Then we' re going to look at applying it to individual stocks. And we were specifically going to be talking about, we' re going to be looking for how it might be used to generate entry signals for bullish trades. Okay. Stock trading using the market forecast tool. All right. But I, I can see a lot of you have already chatted in C case. He says, nope, not familiar with this one. Tom Howard, uh, Kevin says, yes. Most of you are saying no though. Don, Vlad, Brian, uh, Marcia Lago, Vanessa, Jack.

No, no, no, no, no. Okay. Very good. So. I m going to go to ThinkorSwim and learn about the market forecast indicator. Okay. So as I mentioned, we' re going to be starting with applying this to, to an index. It is after all titled the Market Forecast Tool. Now, does that mean that it' s going to deliver a perfect insight into exactly where the markets are headed? Nothing works perfectly. Okay. But let' s add this indicator to our chart. We' re going to come up here to the Edit Studies, FLash icon. And we can just go down and how about, you know, I typically do a keyword search. You' ve all seen that a million times. Let Just go down in alphabetical order, down to the Ms for market forecast.

And there it is right there. Market forecast. Let' s add that to our chart. I' m not going to make any customizations at the moment, but let' s apply it to our chart. Okay. And really what you' ll see with the market forecast indicator is that it basically consists of three lines. So there' s a red line. We refer to it as the red momentum line. You don' t have to memorize the names of these things. It' s just a title. It doesn' t change the functionality, but yeah, the red line is called the momentum line. The blue line is, is referred to as the near term line. And the green line is the intermediate line. And really, what these are in summary are three stochastic oscillators.

I' m not going to give you the specific algorithms that generate these lines. It is a proprietary tool within exclusively within the Thinker Swim trading platform. So the, the exact construction I' m not going to get into, but yeah, it' s three stochastic oscillators representing three relatively shortish term timeframes. Some are shorter than others though. Now. So let' s talk about these just quickly. I' m going to start with the red momentum line. Okay. What you' ll notice with that red momentum line is it has, it' s very jagged in its appearance. It goes up and down, reversing direction, very quickly, typically overnight from one day to the next. So it is really measuring very short- term changes in momentum conceptually.

So if we want to get a closer look at that, and that' s why it' s called the momentum indicator, the momentum line, by the way, if we come back up here to our edit studies, let me just clean up the chart for just a moment, so we can talk about this. Okay. So you notice there are tabs here identifying the three lines. There' s our red, red momentum line, blue near- term line. And we need to figure out who this is. What is it? It' s basically the red line. Okay. So if you notice, there are tabs here identifying the three lines. There' s our red, red momentum line, blue near term line, and then and our dark green intermediate line.

So what I' m gonna do is on show, when it says show plot, it literally just means show the line on your chart, okay? So I' m gonna take off the near term line and the intermediate line, click okay there. We' re leaving on the momentum line, click apply. It just gives us a clearer, cleaner view of this oscillator. So if you' re not terribly familiar with a stochastic oscillator, it' s typically interpreted as being not terribly important unless it So, at extremes, okay? So extreme low or extreme high. And these oscillators all oscillate. They move up and down between extreme ranges of zero at the lowest possible extreme up to 100 at the highest possible extreme.

Now, a typical interpretation of a standard stochastic oscillator is that it' s, it may not be very exciting or important when it' s between let' s say 20 and 80. That' s sort of a quote unquote normal range. Reaching extremes though, either above 80 or below 20 can have more significance. But I did wanna point out with this, look how quickly this can go from one extreme to the other. You' ll notice here it is. It does. For example, March 26th, it' s all the way down right close to zero and then it rockets up. And by the 27th, it' s almost up to a hundred. So this is a very sensitive, very rapidly changing indicator of conceptually very short-term price extremes, okay?

Now, most typically there are actually, I will say some market forecast traders who look at these lines individually and maybe they trade just the behavior of one line, most commonly though, they' re using combination with one another. So let' s add another line. And what we' re gonna do here is pump the brakes a little bit, slow down this, the volatile nature of our oscillator. So we' re gonna go to a slightly longer term oscillator. Let' s pop back up here and we' re gonna add the near term. So I' m just gonna lay it on top of the momentum line. So let' s check the box for show plot, click okay again, and click apply. And as we click okay now, now we see that we have two oscillating lines.

The red line is the fastest. It is the one that tends to go most rapidly from an oversold to an overbought condition and back and forth. The momentum line is a little bit slower. It uses a little bit longer data set to make it a little bit less sensitive to day-to-day price changes on a chart. But it Still, this blue near- term line can get from one extreme to the other relatively rapidly, but certainly less frequently. Look at the extremes for the red momentum line. At one extreme one day, at another extreme another day, or two days or three days later. Here you' ll see our blue line, as an example, in early January hit the upper extreme.

It was above 80 and it actually took all the way till the end of March to get back down below 20. So it is still jagged moving up and down, but not in quite as wild of a swing. That' s a function of the fact that it' s using a larger data set. It' s less sensitive to day-to-day price changes, okay? So that Is the red momentum line, the blue near- term line. You can see red is fastest, blue not quite as fast. Then we have our slowest line, okay? Let' s go back up here to our edit studies icon. And let' s look for, let' s edit this and add that intermediate line back to our chart. And I' m just gonna layer it right on top of the other two.

Click okay, click apply, click okay again. And now we have our green intermediate line. And you can see if we study those extremes again, this one can actually hang out at one extreme or the other for an extended period. The time that it takes to get from one to the other significantly longer than the other two oscillators. So what' s the basic bottom line psychological underpinnings of these three oscillators? Well, one may be attempting to get some insight into the very short term. It might be thinking of like, let' s say, what are the behaviors of the intraday traders? Are they primarily, you know, the intraday traders? Are they primarily bullish or bearish conceptually? That' s our red momentum line.

The blue near- term line may be trying to get its fingers on the pulse of the bullish versus bearish behaviors of let' s say the swing traders, okay? All of this is conceptual. Certainly can. To put a label on any individual, you know, swing trader or whatever, but the timeframes are different. Okay, the intent here is different. Then we have the green intermediate, which for some they interpret it to sort of be a technical insight potentially into what' s going on with, let' s say the trend traders. Those that are in positions maybe for weeks to months. Okay, what are those longer term shifts in price activity? And it' s actually for this market forecast tool, it' s not one or the other that are typically seen as potentially insightful, but it's, it' As a combination of all three conceptual groups behaving similarly at the same moment that may be significant.

So that' s sort of the, that' s sort of the backdrop for how this indicator is built. All right, a little bit heavy lifting there. How might it be used? Well, let' s talk about today. And this is the one signal that I' m gonna focus on today, but possibly the signal that is, that is seen as carrying the greatest weight among traders, who use market forecast tools. Now I' m not gonna say for every trader, this holds true. Okay, not every trader uses this tool exactly the same way, but there As a specific set of circumstances that for some is the most significant development in the way these three lines are working together. And that is when all three lines get below 20 at the same time.

So I' m gonna draw in a little visual reference point. Okay, Chris B says, what' s the signal? What' s the significance of the near-term line getting more extreme than the momentum line? Chris, that I don' t have a specific signal to attach to that event. That might be interesting to investigate, but I don' t know that it stands out traditionally as a significant development on this indicator. Would be interesting though, to just go back in time, look at a bunch of charts, look to see that sort of disparity in behavior. But what I' m gonna do today, I' m gonna do a little bit more, is let' s draw in a reference line right at 20. So I' m just going to come over here to the left, click once with my line tool.

I' m going to click again over here to the right. And that' s just going to be a visual reference point. We don' t even need this on the chart. As a matter of fact, it' s probably easiest to just do this numerically. Okay. I' ll show you what I' m talking about. I won' t even have this line on other charts, but, what a trader is very commonly looking for when using this tool is when all three lines get all the way down below 20 on the same trading day. All right. Now this is actually, that sounds like, well, these move around so much. Surely that happens pretty frequently. Nope. As a matter of fact, this is a pretty uncommon signal. In my experience, this signal happens maybe once or twice a year on a typical chart.

Now, when things are bearish, you' ll see this signal actually quite a bit more frequently. And for some that may actually be a negative sign, but most commonly we' ll see all three lines converging below 20 on the same day, only once or twice a year. Okay. So for the S&P, that' s literally the case. I think we' ve only had this happen twice. So first of all, let So, talk about why do we care about this event? Well, if all three lines representing three different timeframes are down in the oversold area at the same moment, conceptually, where might we think that price is headed? If it' s oversold on a very short term timeframe, if it' s oversold on a longer, on a little bit longer term timeframe, and then it' s oversold on an even an intermediate timeframe.

Well, maybe that might signal that we' re at or near an extreme low on price. And we may be looking at a potential reversal. It doesn' t always happen, but we' re going to look at plenty of examples today. Okay. So let' So put an oval here around a day where this actually occurred and don' t fall for the sort of the crutch of looking at this 20, this line drawn in at 20. Typically, it may be better to look at the numbers up here in the left instead, because eyeballing it can actually lead to misinterpretations of this signal. Okay. So look up here in the upper left and you' ll see they' re actually the numerical values ranging from zero to 100 for each of these three lines.

There' s the momentum line, there' s the near term line, there' s the intermediate line. And as we move along the chart, you can see the absolute values of those from day to day, from really from, yeah, from one day to the next. So if I point at what appears to be all three lines dropping below 20, I' m just going to leave my cursor right there. Now let your eyes drift back up there to those numbers that I just showed you. What' s the current, what' s the value as of that day of the red momentum line? 554. What' s the value, the numerical value of the blue near- term line, 10,56? What' s the value of the green intermediate line? It' s at 10,17.

All three very clearly, numerically confirmed, below 20, okay? That event is known by market forecast traders as a cluster. And specifically, this is a bullish cluster. It So when all three of the lines get below 20 on the same day. So from that moment, a trader might anticipate a reversal of price. So let' s make a second line. So this was right, it really was right on, yep, that was on April 18th, April 18th up here on the chart happened to be this, this red candle day right here. So let me put an oval around that, that red candle day. Did this absolutely nail the bottom of the price movement on the S &P 500? No, it actually dropped for one more day.

That' s another element of this indicator that we want to remain aware of. Looking for clusters is actually an effort to look for bottoms on a chart, but no indicator is perfect. And this one, you' ll see sometimes it will absolutely nail that bottom. In many cases, it does an excellent job of doing that. Other times though, it will be premature, maybe a day, two days, three days early, and that can build, that can have implications for the way that the trader builds their exit strategy. Okay, but yeah, in this case, it turned out to be one day early, but overall, how did it do for spotting a major turning point on the S &P 500 or anticipating that? Not bad. Okay, well, let' s look back over time.

Here' s our oscillators moving back and forth. Let' s see if we can find another example here. Here' s a quick visual reference point for spotting these clusters very readily because this can look very messy. I know the first time you look at this indicator, it can just look like a bowl of spilled colorful spaghetti and it can look like it' s hard to find these cluster events. But really, if you just focus on, and how about I do this? I' m going to come up here to our Flask icon again. Let' s make this green line thicker. So instead of having a width of one out of five, let' s go to three out of five for thickness, okay? Could click okay.

What this is going to do is going to make that green line a little bit more prominent. And this is sort of what' s going on in the trader' s mind who' s trying to spot these clusters. As long as the green is up here, there' s no opportunity for a cluster. So we don' t even waste our time looking for clusters there. It' s when the green line dips down below, below 20, that we then wait to see if the red and the blue join that green line. And that helps us zero right in on a cluster. So for example, here' s one right here. Does that make sense? Yeah, so right there, that was on October. Did we get a cluster before that?

Now look at these numbers again, because you might look at this and say, well, aren' They' re all below 20, right here? Nope, on October 25th, the red line was at 5. 6. The blue line was at 36. 8 or 36. 9 and the green was at 10. So that is not a cluster. Let' s move forward a day on October 26th, look at that. That' s where we get the red lines at seven, the blue lines at seven and the green line with a little bit of rounding is also at seven. That' s just the way it worked out. That' s the way it worked out that day. So that actually generated a potential reversal signal, a bullish cluster right there.

Look at this again, in this case, one day early, but did it do a pretty good job? If we Re looking for bottoms, which is a really tough thing to do, in this case, did it do a pretty good job of identifying that within a pretty good tolerance? Not too bad. What about back here? Was there a cluster back here? Well, it might look like our green line is going down below 20 here, but if we point at that day, the red was actually at 22, the blue is at 25 and the green was at 20. 3. None of them are below 20. So this would be considered a legitimate bullish cluster by those who look for clusters on a chart. This would be a legitimate bullish cluster.

And now let' s get to where we, there may be some fuzziness. This might look like a cut and dry indicator, but there are times when we' ll see two of the lines solidly below 20 and the other one is barely above 20. And for some traders, they' ll call that, hey, that' s close enough. For others, they' re more hard line about it. And they' ll say, no, either all three are below 20 or there' s no signal. And I wanted to bring that up because look what we had very recently. Look at our green line pushing down below or apparently 22. 0. Let' s see how close we can get. Let' s go. How about that day right there? Oh, let me pause my cursor right there.

So August 5th, you' ll see that the red line is at 15. The blue line is at 16. And the green line gets to 21. So two below 20. The other one is barely above 20. And the green line gets to 21. So for some, for some traders, and this really just comes down to the trader' s discretion, that right there may be close enough. They might say, hey, it' s close enough for horseshoes and it' s close enough for a market forecast bullish cluster. And for those traders, where did that signal generate? Right there. Now, for those that are sticklers, then they say, no, but either all three get below 20 or not. At no point in recent history did we get all three below 20.

So really for the S&P 500, the only true as- defined cluster, all three below 20, they only happened it only happened twice here at the fourth week of October. And right there, the third week of April. In both cases, these turned out to be potentially valuable reversal points for bulls. And that one is, that one' s, let' s say a third signal with an asterisk. Okay. Marcia Lago says, can I tell, exit after, yeah, we' ll talk about exiting. That' s a good question. All right. But let' s go apply this to some stocks. Okay. We have this new knowledge. It s called the market forecast tool, but that name might seem to imply that it can only be used for making projections about where the markets themselves are heading, like the S &P 500 market index.

No, actually there are traders who do use this on individual stocks. So I thought what we do, I actually went before the webcast started and I looked for all the clusters on, I don' t know, the top seven or eight companies here in the S &P 500 as, as defined by the, by their market capitalization. So let' s just go right up here to Apple and see if we can spot this. Now notice we don' t have a line drawn in, so we can, we can just visualize it. If you want to, you can draw on, draw in lines. That' s not difficult. Trey says, I feel like you' ve seen this class before. I did. I did do a similar presentation. This one.

s going to be, this one' s going to have some elements though, Trey, that I did not talk about in the last webcast. I don' t try to just repeat myself in webcasts. Okay. Always try to add at least more information to the discussion. But yeah, the last time I talked about this was in January. So seven months, I haven' t visited this topic in a long time. So I thought it was time to bring it back up. In any case, yeah, let' s look for clusters below. And I highlighted them here just for very quick visual reference. There was one right here, all three signaling right there. And you can see that did a fair job of signaling right before a reversal in Apple.

The price did wind up going a little bit lower though, maybe a month later. Here we got another cluster. And that was following a pretty good contraction in price, a decent rally from there. Another cluster here, followed by a rally from there. And that was following a pretty good contraction in price, a decent rally. Now here are three that may have been a little bit frustrating. And this is where we' re going to start to bring in some potential rules for the management. These are just example rules for trading the market forecast tool. Okay. So number one, we look for a bullish cluster. Okay. That' As a potential entry. And if it' s helpful, I can even label that entry. There we go. Now notice I haven' t combined this with any other analysis of the price chart.

And that' s actually with, with, with many technical indicators, they' re commonly combined with like a moving average or some support and resistance analysis. Actually with some traders, the market forecast tool is by itself that the appearance of the cluster is adequate for a signal. Now that' s going to be up to the trader, whether they' re comfortable with that or not, but that' s a potential entry. And in my last discussion, I kind of left it there. We mostly talked about the construction and the, the entry applications for these sorts of, for, you know, trading market forecast tool signals. But I wanted to talk about this with, with clusters. I want to talk about, first of all, the fact that sometimes they don' t work very well. All right.

And sometimes the timing is a little bit off. So in both of those cases, the trader might want to have a plan in case the timing is off a bit and in case it fails entirely. So let' s talk about managing the downside of a trade signal that just doesn' t work out. So when do we take exits? Let' s talk about our loss exit first. Okay. Which isn' t the fun thing, but we' re going to talk about that because it' s realistic right now. Number one is that since this signal does have a tendency sometimes to be a little bit early, a day or two or three, for some, they may not actually even put their stop in for a few days after the signal to let it wiggle around a bit.

I know that sounds a little bit counterintuitive. And if we do that, we have to recognize the stock can actually travel down quite a bit, even if we only give it a day or two or three. But our first stop exit or loss exit is a stop below a five- day low. Here' s what I mean by that. Let' s suppose we look at this signal right here. Okay. I' m going to zoom in on this a little bit so we can see it. So here was our signal day. That' s when all of our signals were down. So here' s what I mean by that. All three lines got below 20. It' s the first day we closed below 20 on the same day. But then the price went down for a few more days.

So rather than putting in an immediate sell stop order, what the trader might do is wait for price to settle out and then look. So we just wait for five days afterward, one, two, three, four, five. So on this day, it' s time to place the stop. So what they then do is they look back over those last five days, and they' re like, okay, we' So, what they do is they look at the last five days since the signal and find the lowest price. What was the lowest price? It was actually the low of this candle. Low of that candle was $168. 49. And they might place a stop, maybe a percentage point below that low. Okay. But what that' s doing is just allowing for the fact that sometimes the signal is a little bit early.

And if we were to advance that to here, here' s our signal day, stop. So we' re going to put a stop. So we' re going to put a stop. So we' re going to put a stop. And then the stock goes up and then down for a while, one, two, three, four, five days later, we look at the lowest price during those five days and place a stop below that. Now that raises a second point here. Okay. And that is, well, there was an entry signal here and it' s kind of not working out. And yet we get a second entry signal right there. Okay. When these start to generate, when the market forecast tool starts to generate entry signals in relatively rapid succession, think about what that implies about our oscillators.

It means that they' re sort of hovering down at the lower end of the scale. Or in other words, that can be a sign that there' s some strength to bearishness on the stock. So for some traders, if they see an entry signal followed by an entry signal, that' s actually not a bullish signal. That is a bearish indication. And so they may want to avoid entry on those second entry signals. So here' s another rule for our entries. No second entry until the green, not gain, but green, has risen back up above 20. Okay. Here' s what I' m talking about. So when we start getting these multiple entry signals, it might be a sign that the stock, it still has some room to go down.

So if we look at our green oscillator, we got an entry signal here. It did not go back up above 20. It actually just continued down and generated another signal. So if we look at our green oscillator, we got an entry signal here. It did not go back up above 20. It actually just continued down and generated another signal. And it continued down and it generated another signal. These two, according to some traders, would be considered false entry signals. Okay. Now look at this. Green finally starts to go back up again. Maybe there' s a new resurgence of some strength among the buyers being signaled here. It does fade and come back down one more time. This signal might be considered a new valid entry signal, according to that rule.

Does that make sense? So if we get in on one signal and it fails, we do not take subsequent signals until we' ve at least seen that green line come back above 20 and then come back down. I think that one might need a little bit more illustration. Let' s go to like ACN. Okay. So here' s ACN. It actually generated a signal right here. So if we look at our green oscillator, we got an entry signal here. It did not go back up above 20. It actually continued down and generated another signal. Here. Okay. You can see what price did after that. Would a stop have been hit? Absolutely. Yeah. If it' s placed below a five-day low, that stop is hit.

Now, the green intermediate line, though, just comes down here and it just sort of hangs out and it pops back up, gets above 20 again, then finally dips back down again and then generates a signal. Now, what that means is that we ignore this signal here. We ignore this signal there. So right here, there' s a cluster. Right here, there' s a cluster. But this is just our green line hanging out down below, and these two are ignored. So look where those that generated signals here, that one kind of failed. This one wasn' t bad. In the short term, there was a bit of a bounce. But again, pretty early fail. So we' re going to wait a little bit more. We' re going to wait until we get the signal back.

Let' s go back to ACN and take a look at some of those signals here. Failure. So we' re starting to refine how the trader takes their entries and how they manage the downside. So bullish cluster, but we don' t look for another one until that green has come back up above 20. In either case, if we take an entry, a stop might be placed below the five-day low following the five days after the signal. That' s quite different than some other trading systems. Now, finally, that wasn' t the fun part. Talking about, you know, trying to mitigate the downside of a trade, not terribly fun. What about taking profits? So our profit exits. Well, there might be a couple of these.

There are some, some traders are just looking for a swing trade and others might be looking for a trend trade. Okay. So a swing trade is a trade that' s looking for a trend trade. Swing trade just basically means we' re trying to buy low and sell high in the short term. And in that case, what a trader might do is just look to a recent high. Maybe we' ll just switch up our symbols again here. We already looked at Apple. Let' s look at Microsoft. Actually, Microsoft has generated no clusters in the last 12 months, not a single cluster. So, that does tell you that they can be unusual. Let' s move on to NVIDIA. Yeah, here was a signal right back here. There' ve only been two.

This looks like a cluster right here. Nope. Never got all three below 20 at the same time. So here on October 27th, there was a cluster. There was our signal. A swing trader may take that signal and look to get out just as we get up to previous highs. And they could apply a little bit of discretion here, but maybe they' re looking to sell if we get back up to that high or if they' re slightly more likely to sell. So that' s a signal. So let' s look at NVIDIA.

What are NVIDIA' s next up this month? Okay. Let' s check motorcycles. So maybe this one, if we zoom in on it a little bit, it' s going to be a little bit more helpful to see this. So our entry signal was actually on this red candle. We wait five days, one, two, three, four, five. So the lowest price of those five days is right here. And placing a stop below that might have an initial stop, you know, down there somewhere. Okay, then price rallies and pulls back to a new low. And once a trader has seen that low in the rear- view mirror, when price starts to rally again, they may move this stop up to just below that low. So we raise our stop on higher lows. Okay. Okay.

Oh, that' s not going to work out very well. I' ll just leave that like that. That' s fine. You can see. Okay. So this, in this way, the trader is planning. They have some flexibility in how the, how the, the signal might be implemented. For some traders, they' re just looking to get in, swing up, exit. They have a plan. If the stock fails and goes down, they have a stop down below. As always though, with a stop, it' s never a guarantee that we' re going to sell at an exact price. You know, if price falls hard enough, we might sell at a lower level. That' s just sort of the nature of stops. But if the price is persistent, runs up, pulls back to a new higher low, we cancel the stop and move it up here.

And then it' s just sort of a lather rinse, repeat process. Stock runs up, it pulls back and establishes a new higher low. And maybe the trader moves that stop up again. That would be sort of typical, trend maintenance. And then eventually, let' s see if we get an example here. This guy is kind of a persistent trend. Okay, right here, you can see the stock ran up. It came down to a low and started to move up. Maybe they moved their stop up here. So it was there. Maybe it got triggered out there or, or here, something like that. Okay. That would be a typical trend exit. In this case, that one turned out to be the best one. It' s not always going to be the case. All right.

Well, what I would suggest you do, if this is your very first exposure to this tool, first of all, you may want to go back and re-watch the archive for this webcast. If you really want to understand all of these example rules that I' ve laid out for the trading of this signal. Also just run through some stocks in a watch list. So we' ve had a look at four or five symbols already, but if we were to bring up like Amazon, oh, I did want to point out with Nvidia. Yeah, right. Here' s another great example. This is where we got really close on. Let' So, see if you can position your cursor just right so you can see the signal. Where was that, right there? Yes, so on.

Sorry for the flashing there. Remove that. There we go. So, on April 19th, our red line got down to four. Our green line got down to 18. But the blue line was at 25. 0. 20, you see how, how narrow of a miss that was on a cluster for those that are very hard liners about this. This would not have been considered a valid signal, but I put this question mark on here because for traders who are using the, this sort of, this sort of a system, they need to know whether these are going to be considered valid or not. Did we have another single right here? And I missed it. Nope. That just, that' s that one was close, but no cigar there. Okay. Yep. No, no cluster there.

Anyway, but yeah, we can go through a whole bunch of charts very quickly. This is not a signal that comes up very often. So checking to see whether it appears to be working on, on stocks in one' s watch list can be pretty quick. Amazon has only generated one signal in the last year. Did it get one right there? Nope. Nope. Nope. No cluster there. Meta. How many signals has it generated? None. Okay. Google or alphabet. There was one right there. There was one in the last 12 months and that seemed to be a pretty high- quality signal after the fact. But as I mentioned, they don' t always work. Okay. But guys, that' s what I wanted to discuss with you today.

That' s how a trader might use the market forecast tool to trade stocks for swing trading or for trend trading. Now I have noticed here as I wrap up my final comments, there' s a survey that' s been added to the chat window. Brett' s been kind enough to repost that a couple of times. If you would do me the favor, just click on that survey. Now it' ll have it ready for you to fill out when we' re, when I' m done with my comments here. I always appreciate that, that survey. If you take the time to fill it out, I Let' s take the time to read it. It' s only two multiple choice questions in a, in a comments box and a suggestion box is really quick.

So if you' d fill that out, that would be fabulous. But guys, yeah, we have discussed how the market forecast tool is built, how it might be used to generate signals. And we' ve also talked about how, how a trader might plan for taking losses or taking profits. So I hope you' ve enjoyed this. This is what we do on these, in these Tuesday afternoon discussions. And I hope that you' ll put it in your calendar to join me each Tuesday. Now, a couple of suggestions for you. Number one is that if you' re not following your favorite presenters on X, you' re missing out on a, on a fabulous resource there. You can follow Brett on X at BrettCrowtherCS.

You can follow me on X at CameronMayCS, but this really is the very best place to connect with me in between the webcasts. And it doesn' t cost anything. And you can see there' s my handle. Again, speaking of no cost, you can also subscribe to our Trader Talks channel. I would strongly, strongly encourage you to do that. You can go right down below the display window right now, click on the subscribe button. YouTube is the best place to find our previous webcasts organized by topic into playlists so that you can zero in on what' s important to you and get, get a tailored education through those webcasts very efficiently right there. Those playlists, but of course you can also join the live discussions. Okay, everybody. Thanks.

I' m going to set you loose. Thank you to how many people have already clicked that like button - 41 likes definitely appreciated. Always. If you' re watching one of our webcasts and you enjoyed it, click that like button every single time, because it helps every single time it helps our webcast find a broader audience and YouTube through the algorithms. And, and it, it also just lets the presenter know that they' re doing a good job. Always appreciate it. Sounds like applause to me. Okay. I do see a question here. Is it possible to generate signals on S and P? We actually began the webcast was exactly that. So you may want to go back and watch the archive. Sounded like you might' ve popped in a little bit late, which is fantastic.

No problem with that. But yeah, we did discuss that. All right, everybody. Thanks for giving me your time today. I' m gonna let you go watch the rest of our webcast for the rest of the day. Thanks Brett for helping out in the chats. I' ll look for you in a future webcast. I. I will also look for you on X, but whenever I see you again until that moment arrives, I want to wish you all the best. I wish you the very best of luck. Happy trading. Bye- bye.