{"id":38506,"date":"2014-08-06T12:41:41","date_gmt":"2014-08-06T16:41:41","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=38506"},"modified":"2014-08-06T13:18:55","modified_gmt":"2014-08-06T17:18:55","slug":"a-visit-to-the-prop-desk-allstarcharts-video","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/a-visit-to-the-prop-desk-allstarcharts-video","title":{"rendered":"A Visit to the Prop Desk- @allstarcharts (Video)"},"content":{"rendered":"
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JC Parets<\/a>, @allstarcharts<\/a>, is a market technician and stopped by SMB Capital to chat with our College Training Program students and newest traders about the benefits of technical analysis. He is a regular guest on CNBC, Bloomberg, Business News Network, Wall Street Journal and Yahoo Finance among other financial media outlets. One of our traders summarized the key concepts that JC shared with our desk.\u00a0 The video below captures his entire presentation.<\/p>\n

We hope some of these concepts are helpful to your trading!<\/p>\n<\/div>\n

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“It’s all about who you are and knowing what you like” – J.C. Parets<\/p><\/blockquote>\n

Price Analysis<\/strong><\/p>\n

Analyze the price action to indicate whether the underlying instrument or sector is weak.<\/p>\n

Correlation Analysis<\/strong><\/p>\n

When JC trades a position he wants the correlation to be as close to 0 as possible with the overall market. \u00a0This maximizes the overall returns because a force separate from the market is moving the stock.<\/p>\n

Sentiment Seasonality<\/strong><\/p>\n

JC strongly believes in historical data to indicate where\u00a0the market could move based on the season. This can be illustrated whether we are in an election season, which term the president is in, which party is in office, whether the economy is experiencing a drought, in a bear or bull market, etc.<\/p>\n

Divergence<\/strong><\/p>\n

JC uses the Relative Strength Index (RSI) to identify when momentum is either slowing down or accumulating.\u00a0 This is an early indicator of whether to get long or short the underlying instrument before the move occurs.<\/p>\n

Market Analysis<\/strong><\/p>\n

Consider analyzing different markets to see how they move in comparison to one another. \u00a0JC was expecting a pullback in the SPY, because IWM and RUT pulled back recently, which could indicate that institutions are pulling money from growth stocks and the SPY is soon to follow.<\/p>\n

Bullish and Bearish Sentiment<\/strong><\/p>\n

The biggest returns can come from Bonds, commodities, currencies, and stocks that have been severely beaten down or overextended. \u00a0When these plays bottom or top out they act like rubber bands, allowing the trader to maximize returns as they consolidate at the tops or bottoms and sling back in the direction from which they came. \u00a0JC scans for analysts that are very bullish or bearish and prepares himself for when the instrument is going to reverse.<\/p>\n

Moving Averages<\/strong><\/p>\n

JC utilizes the 50 and 200 day moving average to identify a trend and doesn’t use them for support and resistance<\/p>\n

Risk\/Reward<\/strong><\/p>\n

Your entry and exit for a position are critical in order to maximize your returns and minimize your losses. Therefore, as a technician it’s imperative that you trade\u00a0clean charts where you have the ability to identify an entry and exit. His favorite risk\/reward play is the failed breakdown. \u00a0In these types of plays, he searches for stocks with large short interests so when the security fails to breakdown any further it has a rubber band effect and shorts are forced to buy, sending the stock up much further.<\/p>\n

Charts<\/strong><\/p>\n

Different charts can be utilized when looking at different markets\u00a0because they all tell a different story. \u00a0In some markets, it may be better to use a line chart versus a bar chart. \u00a0In addition, JC believes it’s best to use thicker lines for your entry or exit so you have more of a range to work with instead of a set price. \u00a0If your stop gets hit and moves marginally lower before ripping several points, then you would have missed out on a large opportunity.\u00a0 Uniquely and for this reason, he was taught to draw his lines with a crayon<\/em>.<\/p>\n

Instrument Selection<\/strong><\/p>\n

In order to be successful as a trader it’s imperative that you\u00a0identify the best way to express your idea. \u00a0In certain situations the sector that you want to play doesn’t move. For example, coal has been heavily beaten down and you want to get long coal. However, the ETF (KOL) barely moves, therefore you’d rather play a coal stock to maximize your gains. \u00a0In addition, you may want to choose a coal stock with a high short interest so if the commodity reverses you have major\u00a0factors\u00a0that can allow you to maximize your returns, such as bearish to bullish sentiment in sector, short squeeze, analysts\u2019 upgrades, etc. \u00a0These are important steps that can allow you to maximize your profit.<\/p>\n

We hope you enjoy the video of @allstarcharts visiting SMB.<\/p>\n<\/div>\n

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