The Confirmation Signal | Podcast Episode #195

0:07
Hey, I’m Ryan Mallory and this is my Swing Trading the Stock Market. I’m here to teach you how to trade in a complex ever-changing, world of Finance, learn what it means to trade, profitably and consistently managing risk, avoiding the pitfalls of trading. And most importantly, to let those winners run wild, you can succeed at the stock market and I’m ready to show you.

0:28
How, hey, everybody, this is Ryan Mallory with Swing Trading the Stock Market and I do have a good episode for you guys. To listen to today. Before I get started, though, make sure that you check out swingtradingthestockmarket.com. It has all of my market research that I do each and every day on the stock market, that’s going to include my daily list of setups that I’m following.

0:50
My weekly wash list. You’re also going to get the most intriguing charts of the day along with weekly updates on the Fang stocks. The S&P 500 Tesla, NASDAQ 100 and Russell 2000. So make sure to check out that this email today is about trading in a choppy market, and that’s it. Exactly what we have in the stock market.

1:07
So far this year, this gentleman rights, I have been a subscriber to swing trading the stock market for around a year now. And have learned a lot about charting and risk management. I appreciate your podcast and the skill sets that you helped newer Traders. Develop. One thing I noticed though is that you like to wait for a move to be definitive before you enter a trade, you speak to trying to get the meat and potatoes rather than the whole move.

1:31
I definitely agree with the strategy, but I found it more difficult to do this in this market because As a sell-off can happen so quickly. Sometimes what would be interpreted as a confirmation ends up, being the entire move? I have had more success recently trading and trusting the technical analysis and just assuming the trait will hold the support level, it is approaching and bounce.

1:53
Then I will try to set my stop loss at an appropriate level using another layer or two of support below that level it is approaching or holding at. I was wondering if you have adapted your strategy with this type of Market in are willing to entertain Earlier, or if you are still waiting for confirmation, if you still wait for confirmation, is there a specific percentage increase you like to see on a bounce to determine if it is appropriate to enter sincerely Leeroy Jenkins, okay?

2:19
His name’s not really Leroy Jenkins but I just gave that to him on the Fly because I forgot to come up with one before doing this podcast. So really good question. And yes, it is a very choppy Market. I tell people, you know, don’t look at the NASDAQ and the S&P for how well this markets doing. Look at the Russell 2000 right now because since Are you late January?

2:36
The stock market has been in this constant sideways trading pattern, and it’s getting Tighter and Tighter, and it’s not showing as much movement as the rest of the indices. And that’s the bulk of your stocks out there right now, what’s keeping the S&P 500 and NASDAQ 100 going higher on what seems to be a regular basis until the past few weeks is the Fang, stocks, Microsoft Tesla, because their market caps are so big.

3:00
Now, before we dive anymore, into that, what am I drinking? I’m drinking an Irish whiskey. This stuff is called the Busker. I’m a little disappointed that it’s only 80 proof. That means it’s only forty percent alcohol its triple cast triple smooth.

3:16
It’s got a good look to it’s a little bit on the light side. I don’t know it’s not bad it’s got a little bit of a bitter flavor to it on the Finish. You pick definitely pick up on some vanilla notes to the smell. The taste is just yeah it’s kind of bitter as well. I don’t think it’s horrible.

3:32
I mean like it’s almost like you’re drinking like a hoppy IPA That’s kind of what the flavor of it is. It’s very hoppy, I guess, if you want to call it that nonetheless, on a scale of 0 to 10 that I always rate these whiskies by, I’m gonna give it like a 68 68, is it an everyday sipper?

3:52
I don’t think so. I don’t think so. I think if you’re in the Irish Whiskey’s and you’re looking for an everyday super, this is probably one of your better choices, but when you compare it to the whole gamut of Whiskey’s, I don’t think this is very good. So 6.8 is what I’m going to give it now. Let’s get back to Leroy Jenkins email here.

4:09
So like I said, the markets been very choppy, that’s what Leroy saying here, too. So then he’s asking, okay, when you get into a lot of these traits that it’s, and I talked about this on swingtradingthestockmarket.com when I’m providing a lot of different charts. Ideas to ponder. I always talk about wait for the bounce.

4:26
The start don’t wait for it just into a freefall and just because it’s testing the support automatically assume that’s going to hold the reason why I do that is because I want to avoid unnecessarily bad traits and so you can get into that and it’s going to slice right through it. Especially the market selling off the markets just continuing to sell off minute by minute and hour after hour, if a stock is trading near its support level, there’s a good chance.

4:49
It’s going to slice right through that support level. So I like to wait for a little bit of A bounce in the stock before I decide. Hey, now is the time to get long and the reason for that is because I’m just looking for a little bit of a willingness to hold that support. Sometimes I’ll wait until the end of the day to see if it holds it into the clothes because you can oftentimes get it dumped into the clothes.

5:08
And so then after it shows that it can hold that day. Then what you’ll see, oftentimes, it’s me take that trade the next day, assuming that the stock can break like the highs of the previous day now. Yes, you do a lose a little bit along the way, and what I always told About is the meat and the potatoes.

5:24
I want not necessarily to hit the very bottom or to get out the very top at to get the gist of the move. And yes, in this market, there’s not a lot of meat and potatoes, there is a lot of difficult trading, but we also have to come to the realization to that, not home.

5:39
Markets are going to be very good for trading. I have traded less frequent and this Market than I have in years. It reminds me a lot of 2015, where the market was just constantly going back and forth, and back and forth, but at least in In the market, wasn’t masked by a few stocks that had massive market caps that were pushing the market higher instead, it was just like the whole Market.

5:59
That was just as pure chop Fest. So do I ever tweak my strategy? Yes, at times. That I will but I’m not going to necessarily try to catch a falling knife just because it’s near support because oftentimes those falling eyes become really bad. I mean, you could take something like CEI today, which has gone from like, three dollars a share down to like a buck 50 and there.

6:19
I’m not even looking at the chart, but let’s just say that there is some support at $2 and $2.25. Well, you can buy it at two dollars, but it doesn’t necessarily mean it’s going to stop there. What you’re really looking for when it comes to support as a It’s meant for your stop-loss. A realization is like, okay, it’s it’s trying to hold this price level and if it can hold that price level and bounce then, that’s where I really want to start getting in it.

6:44
Because what it can also happen to is that it can open a support level and you could say, okay, I’m going to buy here. I don’t know if it’s going to bounce yet, but it’s testing support. I’m going to buy here. And then it actually sells off another two to three percent, below key support, you get stopped out of it. And then all of a sudden, the bottom is formed and it rallies.

7:02
Back above the support level. That’s another thing that you have to be very careful about if you’re just buying because it’s sitting at support and not waiting to see. Okay. Is this thing going to finally rally now that it’s testing support, you’re putting yourself in that situation to get stopped Out Below. Support only for it to Rally back above sport because the closes what’s most important about.

7:22
Whether or not a stock hold support, it’s not the intraday action. Can it hold into the clothes? And so, if it dips below a support level, and then it gets back above that support level, that’s It’s in my opinion and some people will disagree with me on this, that to me is a hold of support.

7:38
Because what it shows there is that the Bears try to take it below support, try to drive that stock lower, but there wasn’t enough selling momentum to keep that stock down. And instead the Bulls jump back in and rallied it above support and held it into the clothes.

7:54
And when that happens, you don’t want to be stopped out at the lows of the day. It’s important to recognize that there’s different types of markets and what, what can you really trade and various different markets? Like, for instance, breakouts at all-time Highs are not going to be good when the markets pulling back five to 10%.

8:10
Those breakouts are going to have a much harder time sustaining themselves. In an environment where the stock market is selling off, it is better to wait for it to come down to support and try to play some of those bounces. And yes, sometimes that might require that, you got to give up one or two percent of that initial bounce to verify that it has a willingness to bounce at that level.

8:28
Because in the end support and resistance is made to be broken, just because it’s support, doesn’t guarantee you that it’s going to hold because it’s Traders. And as technical traders at that, we play both, the support being held and support being broken.

8:43
If you’re looking to get short and the same note, we’re also playing resistance holding for shorting purposes and resistance breaking for getting long. So you have to keep that in mind. Support is not a guarantee that it’s going to hold. It just shows you that there is A history of it holding at that level in a fill holds again.

9:01
That might be your signal to get long on a stock. NOW, do I have a set price note? There’s a few ways that I like to approach it. Sometimes if it’s showing that it wants to hold on the day and in that the markets, Ryan at showing a lot of good momentum and there’s like, been this strong intraday reversal. I will play a break of the highs of the day if I don’t get into it and I wait till the next day to get into it, I’ll often times play a break of the previous highs of the day or if there is a declining trend line.

9:27
That’s been following a stock lower. Let’s say apple is gone from 150 down to 120 and it’s sitting on some major support at 120 and along the way. There’s been a declining trend line off of that 150, that is created lower lows and lower Highs, but then I’ll wait for it to hit that support to bounce and then to break through that declining trend line.

9:50
Because the last thing I wanted to do is to bounce and then just hit resistance right at that declining trend line and oftentimes on a pullback to support you will get Get a lot of resistance that follows it as well, overhead. And we also have to accept the fact too that there’s going to be periods and there’s gonna be Seasons where you have more trades than winning trades.

10:08
That’s going to happen. There’s going to be environments like this one here, where the trades are. Not that great, but you have to keep trading. You have to Kate. Stay involved in the market. Doesn’t necessarily mean, you have to be super active in the market in terms of how many trays you’re placing, right? Right now. I am not that active but you have to pay attention because at any moment, the market can put it in the bottom and start to Rally back towards those.

10:32
Highs. Again, it can become oversold enough to where the Bears have no more fire power to push this Market any lower but until that happens. Yes. Sometimes those bounces are not going to be long-lived and they’re going to be losing trades. Bill come back down, they’ll break through the support and you’re out of the trade.

10:48
But sometimes to you can get burned by trying to play these bounces off support before they actually start to bounce reason. Being is that you can hold it overnight and the selling is not done. The bad news is not out completely been digested or Priced into the stock and the next day you get this massive gap down.

11:05
Now Grand that can happen with any stock but when a stock is in a freefall, it’s best to let it settle some it’s like earnings, right? If you’re playing the earnings and you’re playing after hours and you see the stock come all the way down after hours to a key support level and you buy in right there, that’s stockstill.

11:22
May keep dropping and had you just waited to see. Okay, is it going to show at least a little bit of a willingness to bounce off of the support level? Then you might have been able to avoid a bad trade because if it didn’t bounce, You’re letting everybody else trade it. Not you and it goes back to to, as well. Is that, as traitors, our success is not contingent on how many winning trades we have.

11:42
It’s contingent on how we lose, how many losing trades were able to avoid and if you manage the risk, the profits will take care of themselves. Here’s the thing, I know that it’s a really difficult Market out there. I think this is one of the hardest markets, I’ve traded in the last 10 to 15 years and it’s not because it’s a bull market or because it’s a bear Market because it’s Neither.

12:02
It’s neither of those. It’s just a sideways directionless Market outside of a handful of big cap tech stocks. And that’s really where the frustration can come in. Because we expect the stock market to do what we want it to do.

12:18
We expect it to trade and the direction that we’re trading, and when it doesn’t, that means the markets, not meeting our expectations. And in the case, of a lot of these, Wall Street, bet folks, who are putting everything they have on us particular, crypto, or on a See your GameStop, it’s a destruction of life, it’s a destruction of dreams and it’s a destruction of Hope, but sometimes we have to weather the storms.

12:41
We have to go through the winter time in order to get to the spring. And this is one of those moments in the stock market and it’s been like that way for most the 2021 where you have to go through the hard times. So I’m not crazy about Leroy Jenkins approach to trading and trying to assume that it’s going to hold support because those assumptions are very Very, very bad when it comes to trading, I would rather see it, show me first that it wants to cooperate and then get in.

13:08
And then if the initial move was the entire move than it wasn’t really a good trade to start with and there’s a good chance by the time, you realize that you would have taken still a loss on the trade because it would go right back down to where you would have put the stop loss at either way whether it was you buying it at supporter, waiting for the confirmation of that move.

13:27
And if you enjoyed this podcast and encourage you, to make sure to leave a review, five star review, those are the best ones are It’s Lee and it helps me continue to build this audience and continue to provide you guys with this content. If you have any questions please be sure to send them to me. ryan@shareplanner.com I read them all. I want to use as many of them as possible.

13:43
If not all of them so be sure to send them to me. ryan@shareplanner.com. Thank you guys. God bless. Thanks for listening to my podcast. Swing trading the stock market. I like to encourage you to join me in the SharePlanner Trading Block, where I navigate the stock market.

13:58
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14:16
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