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The Market in Correction? | Mike Fairbourn & John McNichol | 2-28-20 | Actively Managing


you you all right good morning good afternoon
everybody great to have you here and back for our actively managing a
long-term portfolio my name is Mike Peverill and I’m joined here my
colleague and friend mr. John McNichol John the great to have you on board
it’s great to be here thanks for inviting me today big day today huh yes
it is another big day in the markets we’re going to take a look at that folks
specifically we’re going to talk about well hit our agenda here in just a
moment but look at the coronavirus updates we’ll have a discussion on that
we also want to take a look at Corrections potential Corrections in the
market we’re gonna look at that we’ll also look at the hedging and
opportunities that we might find in the market as well so as we get to that
point I want to do this I’m gonna go ahead and jump in but start off with
some disclosure items we’ll hit our agenda and then we’ll get the show
underway so let’s go ahead and get started here please remember the
following presentation is for educational purposes only it’s not a
recommendation or endorsement of any particular investment or investment
strategy please keep that in mind always keep in mind also how transaction costs
are important factors that should be considered when evaluating any trade
addition to that past performance of any security or strategy does not guarantee
results or success the paper-money software application is for education
purposes only as well also remember that all investing does involve risk
including the risk of loss on that point to futures of future options trading is
speculative it’s not suitable for all investors all right please also note
stock markets are volatile and can decline significantly in response to
adverse issue or political regulatory market or economic developments options
are not suitable for all investors there are special risks inherent to options
trading that make suppose investor’s potentially rapid a substantial losses
alright just a final set of disclosure slides there as we jump into our agenda
here so folks additionally we want to talk about a discussion on the
coronavirus so some updates there we’ll open that up and then we’ll look at how
the market is responding have we reached an official level of correction
territory at this point we also want to talk about ways of hedging your
portfolio and then with that – when these situations occur there are also
potential opportunities to be mindful of so having said that I want to go ahead
and just jump into this and start we’ll go through it and talk about a few
different points as it relates to the coronavirus initially so I’m just going
to kind of pull up here the market initially here we’ll take a look at it
right now so we’ve got our market set up this is the S&P 500 index we are looking
at delayed data in our paper money account though right now so the markets
been coming down really John what I’ve been reading about as it relates to the
coronavirus is containment is going to be a huge portion of getting this this
situation under control as this virus is much more transmissible than other
viruses like SARS and MERS yet it’s not as deadly as those but it’s it’s there
there have been more deaths just due to the fact that it is more transmissible
well right and you know we can certainly see how violently the market’s reacting
to it you know one consideration certainly I’m not a doctor
I’d you’re not a doctor last time I checked as well right so you know we’re
you know we’re kind of going off the data as data is coming out but but a lot
of it really revolves around you know markets they like to have an
understanding of what the risks are right and when those risks are more
unknown and things are not as clearly defined we can see how not only can the
markets violent react but also the velocity of it can be very dramatic and
we’ve seen some of the most dramatic moves down in the market for quite some
time I think going back to almost a Great Depression
the Great Depression well that’s the interesting job because you know as we
look at this – I mean it it comes to a point you know you’re getting about
three pandemics every 100 years or so and so it’s it’s a very very small
number that you actually get when it doesn’t come up it’s kind of unusual
because it did kind of catch us even as we’re making market highs this
substantial pullback but to kind of put things in context and see where the
market is operate relative to what’s happening with the
coronavirus I’d printed off a couple of different sheets here for us but the
number of active cases has actually been dropping that’s due to a high number of
recoveries or individuals being discharged who had who had the
coronavirus but no longer have it as you can see over their deaths are still at
8% this is the most conservative metric so I’ve got by the way right some are
much higher in terms of actual recoveries but a lot of those deaths if
you look at that that could have easily occurred due to possible suppression of
the information initially around the epicenter of the virus and so as we look
at this and see active cases coming down you kind of try to paint a picture
how about might tie in to the general market here is it being overblown or not
and so total case is kind of flattening out as well as you could see when things change and when things
change very quickly we can see how dramatic that change can be absolutely
absolutely in fact you know is we just kind of shift over to the markets and
and look at some of the responses one of the one of the areas I was looking at is
you know China has got containment of about 60 million individuals you know
they’re trying to contain and they yet they’re still asking people to go back
to work that’s kind of tough if you are you know kind of in that situation where
you are quarantined but something like that could have impacts in terms of
productivity there’s been a lot of discussion about productivity is it lost
forever or will that productivity be gained at a later date you know to kind
of revamp up to what may have been potentially lost in the markets and so
it’s interesting okay so it’s interesting to to note that and and to
really you know as we shift over here John kind of taking into context what
we’re discussing about the situation of the virus and and looking at the market
here now corrective territory and you correct me if I’m wrong right but is it
about is normally about 10% a 10% pullback that’s correct Mike Corrections
are gonna be basically 10% from the high so you know as we look at the sp500 you
know you can do this on your think or some platform select into drawing tools
will grab that diagonal line and drawn from the the high down to the low I’m
just gonna adjust this a little bit you can see that data box that pops up you
know this again just how quickly things move you know just from yesterday you
know we were down about 8% coming off of those highs and as we go into now the
low of the day which we see or be pretty close to that now this is delayed 20
that’s delays you know we’re off about 12% so
basically in that correction territory now
what’s interested in with this mic is you know those year they may follow some
of us on some of her other webcasts but you know some of us have actually
already been talking about bearish strategies from the previous couple of
weeks because even though the market had been making highs it was kind of
relatively a few stocks that were actually driving the market whereas
there were other stocks that were already weakening particularly in the
energy materials and a few other areas Pharmaceuticals you know had shown that
weakness and so you know things don’t necessarily always change on the dime
you know it did kind of change on the dime where a lot of the more high-flying
stocks like your apples and Google’s Tesla’s and all them that you know took
much more of a bigger hit hence the Nasdaq I think actually had even a bit
more of a stronger hit here as we look at ndx and go ahead and draw from the
high down to the low notice you know about 16% much higher yeah now kind of
the adage and as a sure we’ll take a look more of the trends kind of the
bigger they are the harder they fall Nasdaq you know was up what over 30
percent from the previous year so you know what we’re seeing is about 50
percent retracements of that yearly trend that hopeful back interesting John
effect you know to your point on that looking at the S&P 500 index we had
looked at this earlier in the week in a different class charting off the prior
lows in fact if I just encompass this these major lows that we’d seen over
here I’m gonna just drop this a little bit and to go over here and I’ll point
this out we had taken a look at the Fibonacci off
that prior low point right you know as we gone up to a high and what I did
simply is just pull this up here and notice that we had stopped at that 50
and it kind of anchored a little bit over here to John correct so what you
drew there Mike was an example of kind of more the intermediate trend as we
typically define as weeks going into months and you know going over the last
quarter you know we can see that trend and as you mentioned highlighted after
that initial sell-off you know a lot of traders were looking at this you know
well actually going back as few after about two of those days that you know
historically you know when we see such a dramatic pullback over two days that you
know the market bounces back you know 70 some percent of the time or 80 percent
of time a lot of statistics get thrown out but in a lot of our teaching you
know there’s a difference between probabilities and certainty and
certainly probabilities at least over the few days haven’t really played out
it’s continued more on the downside and we’re still in seeing that weakness
right there you know a lot of tweet about these things as well a lot of
discussion on Twitter on some of these Fibonacci levels and when we broke below
that sixty one point eight retracement you know one can see how things can
accelerate on the downside you know once that half or two-thirds area it is not
held now so that’s on the intermediate so while we take a look more on the
maybe a little longer term so so we certainly know we’re in correction bear
markets are defined as 20% off of those highs so let’s say we go back over the
last year in fact let’s go a little bit farther let’s go about two years and
really focus on this overall bull run that we’ve had that would go back to the
low in December of 2018 perfect okay and if we take our drawing tools again that
percentage retracement tool and draw from the low to the high in this
existing trend you know so now we’re looking at more the longer-term more
months going into years we can see where at and the this again kind of gets to
that adage my conned again the the bigger they are as a harder they fall
even with this pullback here over the last week we just penetrated the third
retracement only about a third of that Bull Run go into December 2018 Wow
interesting notice a bit of confluence as well as we look at previous highs you
know we’re kind of in that sideways range in 2019 before the market broke
out in the last quarter towards the end October so we’ve taken back all the
gains going back to October and looks like potentially may look to possibly
retest potential to retest some previous lows I’m going to do take a trendline
here as well and some traders may go back and look at some of these previous
lows if there’s like a more of a trending characteristic and all I’m
doing is I’m just going off of those lows and we’re talking about areas here
and you know this is where you know some technicians you know over the shorter
term feeling the pain but looking at when you know where those lows are
question mark you know as everyone’s waiting is the bounce is a bounce going
would occur as we end this week you know or pundants going to wait for the Fed to
step in or a work concerted effort from the financial community to try and save
the market so to speak but we can see so far again based off of
the information we have right now still pushing in those lows interesting John
and just to touch on a couple of points that you brought up very very
fascinating as we look at this I’m going to jump over here real quick and just
point out to you as well to the to the point you were making around that 38%
now in this pullback that I’m seeing here John is we’ve dropped you know
really dramatically through here that that corrective percentage range but
these levels that we’re seeing over here that you’d highlight here that by far I
must say really kind of a confluence of these points has to be by far the
biggest level of support at least in terms of his story is a historical kind
of horizontal support that we’ve seen through here because as we’ve made our
way back up here yes there were a couple of different stopping points that’s very
near that but that was a very small kind of a
pause relative to these ranges that extended all through really last year so
interesting to see if we can actually hold up here I know some investors will
even go in and look short-term and just see what happens around these levels is
they go into a shorter term basis but I’ll back out of that
well actually while we leave that there for a moment and you know those iya that
may joining some other webcast like on futures we look at a lot of shorter term
timeframes you have a 30 day moving average but you know notice you know
even on these intraday periods you know so far every rally has tentatively
failed right on the bounce and again this is delayed here but with the gap
open we’ve seen kind of a rally up you know kind of more of that trending
resistance and you know at least before I came in here a little more of a
bearish bounce so still battling bulls still trying to get some type of a
foothold but you know so far even on the shorter term I’ve continued to fail okay
Johnny one thing I wanted to point out to you did you have anything else to add
or okay so one thing and maybe we could do this I want to kind of sort of paint
a picture here of what we could see relative to other I’m going to remove
those for just a moment other recent more recent well 2014 is
one the Ebola MERS breakout occurred back into that
time frame I’d take a look at that kind of do some comparisons here too but I
wanted to just examine this big picture John and maybe move over to the big
board real quick just to point out a couple of different items on this
alrighty so what you’ll see I want to kind of illustrate this we should get
this popping up here in a second this is great we’re both on the big board
together I can’t remember saying an image with
two coaches here but hey we’re seeing it now right very good okay
just a couple of points that investors could potentially consider here John is
there as we’re seeing the market in this kind of a freefall sort of fashion it is
difficult to look for any sort of an opportunity as prices are dropping to
such a large magnitude here one thing you might find though with any sort of a
pullback in a chart these these big pull backs oftentimes they’ll pause a little
bit and they might come down here and you might see some sideways activity now
John that could come in conjunction with some news that more containment is
occurring we just talked about less active cases out there now if that’s
combined with something like this it could be interesting and I want to get
your take on this but I want to back out one second to show you one thing just go
back to that twenty I haven’t let see time frame just gonna adjust this real
quick we’ll go to a ten-year so we can include that we’ll click OK and I’m
gonna go back here John let me see it’ll be easier to see actually on your
setup but it sure meant no right there to kind of show where we’ll even go one
more no great now what do they do back down to far let’s do that one more
time it’s good practice okay there we go so pull in right to there so it’s really
this point right here that we saw actually I’m planning to it – that’s
funny with us back in 2014 yes 2014 February to be specific the
Ebola virus breakout in fact you saw it come down here to pause a little bit
evidence of containment and news associated with it now when they saw the
number of cases dramatically reducing and containment which is a key we’ve
been kind of discussing a little bit well that’s when we started to see John
these larger candles coming out of a base that we’re clearly bullish now we
don’t know for sure is this what I’m gonna see in this scenario but I want to
get your take on this see if you have any you
so you know certainly just as technicians you know may go back and
look at previous events to get an idea of what may happen key word is you know
that’s may you know we we don’t have control over outcomes on where things
can go but let’s say we go ahead and go back take a look at that that overall
chart and you know to always kind of consider what can possibly happen and
you know we already you know the the cat’s already out of the bag as far as
correction territory happened very quickly it’s already upon us but looking
at the retracements of the market and you know prior we had that fibs on there
and if I recall correctly that based off of this run-up over the last two years
going from this low going up to that high I believe that two thirds or tres
mint is actually going to be somewhere right around let me go ahead and bring
up the mouse here again is going to be right around this 26 around the 26 50
mark which I believe would be coming back to this low the summer lows taken
back all those gains now when we think about that going from 33 almost 3,400
down to that 26 50 and before this pullback in the market you know
investors and traders should be able to see what downside risk is or what that
exposure is now many people did forecast that this can happen over the course of
four to five days versus you know three to four months as typical Corrections
have a tendency of lasting but that risk is still there
let me go ahead and draw that Fibonacci retracement again and I’m gonna draw
from the low to the high from 2000 that 18 low December going to that high and
then it was actually on 27:42 but I was correct at that low there now if I go
ahead and grab a trendline and draw from the high
down to the low and let’s look at these percentages here okay going down to that
61 point 8 retracement this was it’s almost mind-boggling is that and this is
common for trends at pullbacks you know a half or two-thirds of that previous
move is that two-thirds retracement from the high to the low as you can see is
19% Mike that is just shy of a bear market meaning that by the time that
this longer-term trend technically would break we’re already in a bear market
yeah and so that is a clear illustration of that downside risk even though the
price is down already there can still be some room to go if whether it’s the
markets being blamed on the spread of the coronavirus the supply chain impact
you know other pundits talking about you know elections and all that
regardless it’s happening and that’s and that’s where some of the risk is so you
know traders are looking for some form of the bounce we still haven’t seen that
at the moment but maybe we can talk about some things on you know where you
can possibly plan around that yeah that’s a great point John I wanted to
step out of the view so you can see the full screen but just looking back since
1974 the biggest corrected pullback in terms of a correction exploding bear
markets was 13% we’re basically right there but all within like a week’s time
frame so I don’t think we’ve seen anything like this in at least recent
history that I can remember but so it is dramatic it can’t catch you off guard so
I want to kind of shift John to into we could probably pull back up to the main
screen here but I was going to say let’s see so if we go up back up here and we
look at our screen I want to mention that you know in terms of ways that
investors and I realize a lot of this movements already occurred but I didn’t
want to get into the hedging of portfolios as well of even specific
portfolio specific positions I’m going to get your take on that
we’ve been looking at futures or options and I’ll just look at it in terms of
shares and money management but yeah look at look at that yeah sure so and
you know we’ve discussed this in previous sessions particularly as we
went into the end of the year you know recognizing as far as you know where the
market went up and recognizing some of that downside risk that can emerge is
you know with the portfolio as you have right here Mike you know some investors
may utilize the term beta weighting I’m not sure if you’ve discussed that in in
some of your classes oh okay so you know what beta weight does is it takes a
portfolio where each where each each stock position you know has a you know a
value there based off the number of shares and utilize in some of what we
call the Greeks and an option speak they’re a quick way of doing this on
your platform is if you go ahead and click on the over on the upper right
hand corner on the position statement you have an Actions menu again I’ll
click on that again this Actions menu if we change that to the old layout you can
see what are referred to as the Greeks and these deltas represent how much the
stocks expected to move with a one dollar move and since you have mostly
stock positions I believe you know that that would acquit you equate out to the
number of shares that you have so this portfolio you know showing 662 dollars
if every stock went up a dollar 666 dollars which would be what’s added
to the account okay now the thing is you know how many of
these stocks go up or down at the same rate correct right so therefore
investors may utilize things called beta weighting where we can go ahead and take
all those stocks and make it relative to something else in this case commonly
would be s & p500 and we’ve been looking a lot at the SP 500 lately so I’ll go
ahead and plug in something you know SPX and now what happens is all
of these deltas or the rate of change for those stocks are now not based off
of the stocks change but based off the market change in this case the S&P 500
so what this means is relatively the S&P 500 a one-point change in the S&P would
impact theoretically this account by about six to seven dollars hmm okay so
we can kind of do some math today how much is the S&P down today Mike yeah
there you go a paltry 38 points that’s nothing compared to some previous days I
guess well no but that’s still pretty big right yes we’re off about 1.2 9% so
if we went ahead and took 40 x 7 let’s say okay and of course I’m not all that
great at math I know I’m not sure about you I’m gonna go and bring up a gadget
here will bring up calculator and we’ll say 40 times I’ll just say seven that’s
two hundred and eighty dollars so what that theoretically means is that if the
the index goes up that amount then the impact on the account will be positive
$280 if the stock goes if the market goes down that would be about 280 now if
we go ahead and look pretty interesting on your positions notice things don’t
necessarily come out as you one may expect so it looks like got some few
outliers maybe some earnings or something no no IBM issues with I’ve had
some issues with this in terms of stops hmm and in fact even our charts not
updating so I don’t know what’s happened the last couple of days with looking for
money but it’s been it’s been tricky so I’ve got those numbers I might have to
go through him specifically next week with everybody where we got out where
our stock levels were at where they got taken out but it is a little bit tricky
here John all right so so with that in mind let’s just assume that you know
these numbers are correct you know now with smaller accounts you
know hedging can be a challenge when comes with something like futures
because they are a bit more leverage and instrument you may be more for larger
accounts but there there is an instrument that was more recently
release called the micro contracts which would be /m e s and what can be of
potential hedge is some traders may possibly utilize futures to hedge
whether all or a portion of their account and if I go ahead and take a
look at something like this each point move I present each full point would
represent five dollars okay so therefore when we take a look at today down 31
points right if I do thirty times five that would be $150 so let’s say
theoretically one was short one of these contracts or bearish even though their
account may be losing on paper or unrealized loss this position may offset
some of that so let me just illustrate it real quick let’s say I right click
and I’ll do so I’ll just do a single contract here there are commissions for
that and this time you can practice on paper money as you learned that if you
do want to do this on a real account won’t have to apply for that not all
clients would be approved for it but approval process just like any other
trading authorization so I’m going to sell this which is short I’m gonna click
send and that may or may not have filled right away looks like it’s in there
right now let’s see if I can go ahead and adjust that because I want to show
how that should adjust on the portfolio here if you have any comments go ahead
there Mike no I think it’s great I think you know having this down the nice thing
about these contracts – is you’re getting with
with futures John I know you talk a lot about this in your classes but you get
that leverage where you know selling a contractor to hedge it a portfolio or
whatever number it is we’re looking at in this case five for them for the
micros a small adjustment there can really have a big impact on the overall
portfolio you know given situations like this or when investors are anticipating
weakness in the market that’s correct Mike so with this example
again we already recognize this was a relatively smaller account and even with
something like the micro contract you know it’s still little leverage there
notice it says negative five and so what that did it reduce the bullish exposure
on this account from around almost seven down to about a buck seventy two so that
kind of makes this almost a little more neutral so if the market continues to
fall it is you know thereby giving some protection to the portfolio now the
downside to that is well what the market shoots up its gonna slow the velocity of
your upward moves so you know hedging you know it can cut both ways right your
profitability hedge your profitability as well now that’s just one way that’s a
relatively simple way with a lot of futures they trade essentially
twenty-four hours a day six days a week from Sunday evening up through Friday so
you know we’ve seen a lot of aftermarket moves and so from shorter term basis you
know these are some instruments that some traders may utilize to hedge
what do you think John would investors be looking at a method like this more
over the shorter term for shorter term investments or longer term I mean I you
can be hedging a long portfolio that also has you know some shorter term
positions in there but normally are you keeping a pretty close eye on on on
these hedges just for that reason that you explain it it goes both ways
well with futures you know being leveraged instrument stuff it does
require some attention there they also expire as well and so those position
hedges need to be closed out or they need to be rolled over you know some
in principle for those of you that may be familiar with options which is
another way of being able to hedge an account I don’t know if you want to talk
a little more about that yeah yeah we definitely could we can look at options
I was going to actually yeah if you’ve got a take on options and I can I was
gonna move in – maybe just position management okay after if you want to do
actually look at that well I’ll just go ahead and sure just highlight that you
know other you know instruments that one may do is utilize the sp500 you know
there are index options don’t try that one can utilize and you know whether forty close to forty percent yeah that
translates in options correction so it looks like a little bit of a lag there
on my voice there oh by the way quick note to John and I use a lag on these
charts a lot of the orders have been lagged but yeah notice over here we’re
about forty six but the charts are not showing that on paper money so I think
it’s just the volatility just a quick note okay so with volatility again as
far as it with the audio cutting out you know we’re looking at futures which may
be utilized as a short-term hedge another is looking at SP 500 index
options and however we initially said some investors may buy puts thinking
that provides some protection with which it can but when a lot of investors have
a tentative seeking its things have already kind of hit and hit hard and so
it volatility going from around 15 up to around 40 we can see that essentially
the value of options at least doubled close to triple where they were about a
month ago and so may make it a bit cost prohibitive other examples would to be
would be call spreads or selling call spreads now you actually teach a webcast
called short verticals right right so maybe something to possibly cover in
that session on hedge an account which short call verticals there you go good
time alright great all right go ahead we want to talk about
Emily alrighty so what I was going to say John is some of the positions we had
in our own account and we’ve talked a little bit about this especially in our
early discussions in this managing of saturated portfolio one of the positions
we held through an earnings break I’ll just give a short chart perspective on
this too was Albemarle II which yes has had some corrective activity recently
along with much of the market in fact the majority of our positions for sure
have gone up this was an initial purchase that we’ve made over here
we held actually through earnings it was good until this week so the upward trend
was in place now a couple things we’ve talked about in this class
just as kind of as a reminder when prices go down and let’s say they go
below a key support level or there’s a sharp breakdown in fact in this case we
had a high bar here we closed below the the low of that high bar at this point
right here in this phase now we took off in our portfolio half of the position
which is about 80 shares which there’s still 90 shares left it wasn’t exactly
half but there’s not really necessarily a change in trend yet but one way to
adjust the portfolio is to take off you know if it goes against us and does
something that we don’t automatically anticipate it doing is simply John just
take half off the table because we don’t know what’s going to happen if the trend
changes so say for example let’s brought this real quick here
if the trend changes there you go you want to draw until yeah thank you sorry
folks I’m moving on the other side of the table here so if it’s taking out a
keep level that we might be looking at a level that we didn’t anticipate it
breaking we talked about this a little bit we might take off then you know just
just half off so minus 1/2 of that position here at that point in time now
in fact this was a trend trade so we’re still holding roughly half of this
position but if we get it to come down make a lower high and a lower low if in
fact we’re holding this for our long-term portfolio then we could in
fact exit the remaining one half of that position so this is this in a way to
John us allows us to hedge the portfolio hedge the position but still be a
participant if in fact it starts to break up higher what we could actually
do is we could let’s say you got out we got out of that half right here but then
if we get some activity that either changes the short-term trend breaks
above some highs we could then instead we add that 1/2 position back
so it’s kind of adjusting it based upon information that the market is providing
us and we’re sort of using a little to money management that way as well as
opposed to futures are options but it can be certainly a preference okay so
what you’re saying with that Mike is you know it’s not a matter of if you don’t
like what you see you kind of pick up your marbles and go home because if you
do that there’s that potential loss of opportunity right you know if yeah sure
if you were right and the market continues to you know collapse off your
assumption that’s why one may have closed out their entire position fine
but what if the market bounces and you know how are you gonna be able to get
back in so you’re leaving some skin in the game by scaling out that’s right
you’re not you’re not on the hook for a large position you’re already so every
loss that you’re getting now is exactly or close to whatever you decide half of
what that loss would have previously been you’re not participating as much on
the upside but then again there were there was an interruption on the chart
something that we didn’t anticipate happening and so we took it off the
table at that point in time so it is a way to
to position a portfolio to keep a better handle on on your losses for sure all
right well great I don’t know if you want to round out maybe take a couple
look at a few other stocks you see how they’ve been reacting lately and you
know some you know well exactly and you know in this market and yet one doesn’t
know you know if or when you know the markets going to bounce whether it’s
sooner or later but you know in investors or traders may still always be
out there looking for those opportunities whether from a bullish or
bearish perspective let’s take it late a couple of stocks at you know have been
you know knocked down quite a bit you know still may fall within you know some
of the characteristics of growth and/or value and I think you teach about some
of this too don’t you yeah and one key point to if you’re making adjustments in
a portfolio based on stock yes a lot of stocks now you do get the benefit of
Commission free trading all right it’s got a it’s got a particular categories
but adding and subtracting from trades is not nearly as expensive
it used to be okay very good so you know some example is you know 4-inch Delta
Airlines yep got slammed you know travel you know you know small quarters there
so to speak easy to spread and impact and travel around the world you know we
can see over the last two sessions you know they tested some support going back
to lows back in 2019 now some investors or traders may look for price to confirm
to at least bounce now no guarantee that that will recover but you know you know
the adage of you know buying low and selling high you know the stock is in
that lower range you know over the last year okay
other ones you know it’s a kind of in turn out some stocks you know may get
hit and you know the reason why it makes no sense for something like Delta or
like Mary it or or Royal Caribbean you know to get hit because you know they’re
dealing in the public space and and travel and all that you know here’s
Discovery Channel which you know had hit been hit pretty hard as well and you
know where we’ve seen some stocks that have you know tested you know more
recent lows you know another one that basically goes back and test some of the
lows going back in 2019 and you know this one here you know more unlike some
other stocks and again this is delayed but kind of more that bullish bounce as
price is trading above the high the low day and you know an example you know
just kind of going around the world different stocks different sectors
you know Baba Alibaba you know Chinese stock and we know certainly how the
Chinese economy has been impacted but pretty interesting as far as when we
look at the lows on Baba believe it or not they’re actually still above you
know the highs from last year you know you would you would think that the stock
you know may actually be a lot lower so you know not hit as hard as possibly
some other stocks and some assumptions is that if the mark
does bounce and those relatively stronger stocks may have a little more
of an oomph and you know in the case of baba basically tested the lows in
january so a couple examples to look at and you may want to follow your class on
on some of the fundamental analysis and likewise look at her fundamentals course
and take a deeper dive you know if these are the types of stocks that one would
evaluate on a portfolio yeah I like John like everything you just discussed that
in fact it makes it makes so much sense one thing I would say too in in
conjunction with what you have said is that it can be helpful for investors to
go ahead and let’s see how to get that uh problem Oh excellent
awesome to do exactly what John has been mentioning here and that is to maybe see
what companies out there just big pitcher have been holding up possibly
better than other other companies out there oftentimes John I’ve noticed when
when companies and some of the ones you’re shouting here that are actually
showing strength despite market weakness still existing some companies have held
up better right and so if we take a look at just let’s just look at the Nasdaq
for example well then has next really quite large but let’s say the Nasdaq 100
you go over here we can just simply look at the net change on the day right and
see what companies are improving or holding up even better on down days and
this is something folks you can do on a day to day basis you should get a
general feel of you know are there some stocks that have been holding up maybe a
little bit better let’s just randomly pick one down here what work day work
was in here to the last couple of times I’ve seen work in here we just point
that out to you as one that has had some positive days okay or not nearly as bad
right in a general market and so by coming in here you can get a sense of
maybe you know gosh what could be poised if the market does turnaround as well so
we might be a little bit familiar this company – very good yeah I mean
notice you know like stocks that are in down trends an example of the stock that
their trends held up relatively well right which kind of made me think as
well you know other asset classes out there like gold you know had been
shooting up although had pulled back more recently you know that mining
stocks that are out there I think was Newmont nem kind of like the same
principal you know over the last the trend here going to the end of December
as we just kind of get a trendline you can see your moving average acting as an
example of some support as well now we did just have a bit of a trend break
today but certainly relative to the market you know price basically
retesting on where it broke out a little more indecision so if if that was more
of an overreaction you know some traders may look to see if there’s a bounce or
its able to reclaim that Tramp absolutely so good good points there in
fact glad we could take a look at you know hedging opportunities potentially
potentially buying opportunities or at least where investors might be looking
but I think it’s good to kind of to try to dissect the individual companies –
yeah that’s kind of what you’ve been talking about I mean how much exposure
do they have to list of the coronavirus the outbreak
you mentioned Delta initially I mean gosh small areas can spread pretty
rapidly in fact you might be traveling to other areas and you got different
people in there from around the world right you don’t know what’s going on so
definitely some impacts in certain areas but others that may have been holding up
better you can focus you can look in more detail and that’s something we’ll
be doing – in future weeks just seeing what companies are holding
up the best and kind of examining those companies relative to this really sort
of unknown event we still don’t know how far this is going to get although we’ve
talked about the the total number of active cases coming down at the
coronavirus and recovery rates climbing it still remains to be seen completely
how this does unfold so we’re going to be watching
those two together kind of going from there but glad we could tie those two in
together any final thoughts John yeah I keep in mind with the examples that we
looked at Mike as a bench from beginning our free lestrade purposes not a
recommendation to buy or sell any security but a few examples to you know
take a look at the scene what type of patterns are forming out there and I do
teach a webcast on Monday on technically speaking where we look for these various
price patterns you know whether it’s a prices pulling back to a longer term
support as we saw with a few of those examples or or or what’s at your class
that you teach Oh oh sure yeah you know if we go ahead and go to
weather the thinkorswim platform or on the TD Ameritrade website we just find
that education tab go ahead and select webcasts and from there you can see our
upcoming schedule for the rest of the day if you like what you learn here
today make sure you fill out that survey that’s on the chat there and likewise
get some additional commentary later on in the day as we’re gonna have Pamela
Lee coming up next Cameron May all will provide you know
what’s going on market relative the technicals and on options yeah just
select an instructor bring myself up there and you can see you can start the
week off with me every Monday at the market open and then later on in the day
with technically speaking possibly the best way to start off your week there
you go hopefully besides sleeping in which is a close second or what yeah all
right well folks it’s been great being here with you today
we just we did discuss we didn’t overview initially and discussion of the
coronavirus we also talked about the market in corrective territory John
broke down some really good numbers there we did we looked at the big screen
looked at some charts in that regard John also looked at hedging in terms of
using futures and options I did a little bit of money management discussion in
terms of actual positions that you have in securities
finally we ended on potential opportunities so it’s been great being
here with you all today I hope you have a great
rest of the day and weekend coming up final few disclosure slides here just to
take a look at so please remember that in order to demonstrate the function of
the platform we didn’t use actual symbols however TD Ameritrade does not
make any recommendations or determine the suitability any security or strategy
for individual traders any investment decision you make you’re separated
kennesaw their responsibility on that note John thanks so much for being here
appreciate being here everyone have a great weekend now all right thanks a lot
take care

Robin Kshlerin

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