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M2 Adjusted FAAMNG Tutorial/AnalysisThe current FAANG symbol does not have a very long history. Depending on the symbol, you get a chart that either starts from mid-2019 or 2016. We get couple more years of data in this chart, back to early 2014. I weighted each stock equally according to its 60 month average, and adjusted for M2 expansion, which gives us a very consistent support line. There's also a horizontal resistance line that extends from 2018 onward that is currently being tested as support, which raises the questions: Is historical support now resistance? Is the resistance line now support? Or will we drop below the resistance line once again? It wouldn't surprise me if we got a bounce here to once again test that the Support line is *actually* now resistance and the drop in price wasn't a fluke. Which, maybe it was. But on the other hand, smaller caps have gotten completely crushed, look at the M2 Adjusted Russell 2000 for example: We're getting close to the "value" zone, but we're still at the bottom range of wholesale prices. I wouldn't be surprised if there's even more stop-loss style liquidations at these prices. There are many many unprofitable companies, roughly 50%?!, that are feeling the pain in the Russell. It's not crazy to think that once the smaller caps fall, the rest of the larger dominoes fall. First, there were drops in sort of intangibly valued companies like Netflix/Peloton. Market shrugged it off. Then we saw a single day -0.25 trillion$ valuation drop in Facebook. Market shrugged it off. Now in the past few weeks, Amazon is finally looking terrible, and this is the first time in YEARS that the market seems to be taking it seriously. How long until Apple/Tesla bite the bullet? The market can only shrug off so much localized losses before it becomes systemic. It's only a matter of weeks or months, in my opinion, until we see the remaining FAANMG and others reflect the state of rest of the market. So how did i manage to get the symbol on the chart? This method is not perfect. There's lots of ways to do this. I decided to equally weight each stock by their 60 month SMA, given that mean reversion is a well known phenomenon. But you can use any anything you wish, as long as it normalizes the price in a way that you like. Literally anything. First, I wrote down the SMAs like this: 60 month SMA: FB = 221.34 AMZN = 2250.99 AAPL = 85.60 MSFT = 173.64 NFLX = 380.58 GOOG = 1585.70 Notice that AAPL has the lowest average, 85.6. We can use AAPL as our "benchmark". Divide every SMA by 85.6: FB = 2.5857 AMZN = 26.296 AAPL = 1 MSFT = 2.0285 NFLX = 4.4460 GOOG = 18.524 Now we can add each price together, and divide by our adjuster that we just calculated, to get a fairly crude, but accurate enough, equally average-weighted basket: AAPL+ FB/2.5857+ AMZN/26.296+ MSFT/2.0285+ NFLX/4.4460+ GOOG/18.524 Mash it all together, you get: NASDAQ:AAPL+NASDAQ:FB/2.5857+NASDAQ:AMZN/26.296+NASDAQ:MSFT/2.0285+NASDAQ:NFLX/4.4460+NASDAQ:GOOG/18.524 And adjust for M2 if you want: (NASDAQ:AAPL+NASDAQ:FB/2.5857+NASDAQ:AMZN/26.296+NASDAQ:MSFT/2.0285+NASDAQ:NFLX/4.4460+NASDAQ:GOOG/18.524)/FRED:WM2NS This looks ugly though. The value is so small, there's no horizontal bars on the chart because of a display bug in TV or some other problem. So we can simply multiply the entire series by a value. in this case 15, until we get something that looks good. (NASDAQ:AAPL+NASDAQ:FB/2.5857+NASDAQ:AMZN/26.296+NASDAQ:MSFT/2.0285+NASDAQ:NFLX/4.4460+NASDAQ:GOOG/18.524)/FRED:WM2NS*15 There's a lot of ideas fairly similar to this out there, but I hope this helps someone who might be curious how people came up with these crazy long symbols. Try it with your favorite sectors! Make your own sector benchmarks. You can combine up to 10 symbols at once! Here we only used 6 symbols (7 if you include WM2NS). Good luck and don't forget to hedge your bets :)
NASDAQ:AAPLEducation
by fringe_chartist
5
How to Trade Stocks in a Recession – Survive the CODVID-19Where to put Money During a Recession? #1 Recession-proof Stocks: Discount Store Industry. Here is a list of retail stocks to keep an eye on during the 2020 recession: Dollar General (NYSE: DG ) – during the 2008 crash DG rose more than 60% and since the middle of March 2020, it’s up the stock is up more than 38%. Walmart (NYSE: WMT ) – since the COVID – 19 outbreak, Walmart stock is up more than 19% from its March’s low. Dollar Tree (NYSE: DLTR ) – With a gain of over 60% return in 2008, Dollar Tree is another recession-proof stock that can withstand today’s coronavirus bear market. These types of businesses do well during a recession. The retail discount industry will typically see a boost in sales, which typically means bigger profits for the companies and subsequently these stocks can beat all other S&P 500 stocks. #2 Recession-proof Stocks: Health Care Industry. Biotech company Amgen (NYSE: AMGN ) was among the best-performing stocks in 2008, gaining as much as 24.3% by the end of that year. During the COVID-19 stock market crash, Amgen has gained roughly 24% since its March low. #3 Recession-proof Stocks: Delivery Services Industry. The biggest courier companies in the USA are UPS Inc. closely followed by FedEx Corp . With over 3 billion of the global population in lockdown due to coronavirus quarantine, the home delivery services industry has become an essential component of our society. The foundation of making money when the stock market crashes or in any other type of investing is to study the past. Here is a stock trading tip: Compare which stocks have performed well during previous recessions. For this exercise, we’re going to have a look at the stocks that soared during the financial crisis of 2008. During the subprime mortgage crisis of 2008, the US stock market lost almost 40% of its value. But even in those dire times, where the majority of stocks plunged, there were some healthy stocks that survived the crash. Given the coronavirus stock market crash, we’re going to have a look at 5 recession-proof stocks that can survive this bear market. When we can learn something from the stock market history, it’s best to pay attention. Stock investors looking to pick healthy stocks can start first by including the above-mentioned names in their portfolios. How to Trade Stock In a Recession? A study has been conducted to assess the past six recessions and revealed that if you invested in the Dow stocks during those recessions only during the 1980 recession the portfolio value would have made profits by the end of the recession. Now, you might be wondering… “How you can profit from a recession?” The straightforward method to trade stock in a recession is by short selling. You can make money when stock prices go down by short selling. Actually, stock day traders can make money both ways, when the stock price goes down and when the stock price goes up. Finding good stocks to hold and make profits during a recession is pretty hard. Alternatively, buying dividend stocks can become another profitable method to invest during a recession. Dividend stocks can provide a good source of passive income during times of a recession. You can also use Google Trends for stock picking. However, by far the best stock trading strategy in a recession is day trading. In a typical recession, stock investors will experience more volatility , which is the perfect paradise for day traders. Stock day traders will continue to see volatility as the uncertainty around the coronavirus persists. One major characteristic of a bear market is high volatility compared to bull stock markets. And, the 2020 bear market holds the record as the fastest bear market in history. Bull and bear market volatility look very different. So, as you may imagine, stock volatility is through the roof during the 2020 recession. We’re going to teach you how to make money during a recession with a day trading strategy inspired from Trading Guru Larry Williams . See below: Day Trading with the Best Stock Trading Strategy in a Recession Day trading during a recession can be the fastest way to grow your account. With day trading you can trade both ways: You can take advantage of both the bearish trend as well as from the sharp rallies. Our stock day trading method is based on the same method that Larry Williams used to generate more than $1 million in profits in the world futures championship Robbins World Cup. But, there is a twist. Our team of experts took Larry’s Smash day reversal pattern and twisted the rules to fit our recession strategy. Now, you may be asking yourself: What’s a Smash day reversal pattern? According to Larry Williams , a Smash bar is a bar of increased volatility with long wicks. The Smash bar trading pattern indicates a potential reversal of the preceding impulsive movement. Let me explain… If on the intraday level, the stock price starts all of a sudden to experience a high level of volatility , this should leave behind candle bars with long wicks. Now, it’s important to make the difference between the Smash bar trading setup and the typical Pin Bar chart setup. While these two stock chart patterns might look similar, the pin bar has a small body candle, while the Smash bar has a typical larger body. The stock reversal pattern is completed once the next candle breaks above the smash candle, which will subsequently trigger a buy signal. Note* obviously the protective stop loss can be placed at the other end of the Smash bar. This stock chart pattern works because the increased volatility will attract more traders to take an interest in the stock. However, if the next bars go in the opposite direction it will signal a reversal in the current stock price direction. Subsequently, this will lead to further liquidation along the road and exacerbate the stock price reversal. Now, the coronavirus crisis has unleashed unprecedented levels of stock volatility . This is good news because it means the Smash bar pattern will tend to reoccur more often. You can buy and sell stock in a recession due to the elevated stock volatility . We have learned how to buy stocks, but what about how to sell stocks during a recession? We use the same principles but in reverse. There is also a slight variation of the Smash bar reversal pattern that we can use. Larry Williams calls it a hidden Smash bar. Let me explain it to you: When a highly volatile bar emerges out of the blue that can be a signal of reversal. This bar must have its closing price in the lower third of the stock price range. And, it must be bigger than the bars close to its proximity. Note* this time we don’t count on the long wicks. Note* this day trading pattern works best when we trade it in a context of an established intraday trend as a continuation pattern. Final Words – Best Stock Trading Strategy in a Recession Use our best stock trading strategy in a recession if you want your account to go up even when the market crashes. Learning how to trade stocks in a recession can help you survive while keeping you risk adjusted. The average recessions last 18 months, so it’s important to find different methods to protect yourself. Alternatively, you can also learn where to put money during a recession a safe way. Stock investors can put their money in high –quality stocks (recession-proof stocks) like: Consumer staple stocks Discount store stocks Pharmaceutical stocks Delivery service stocks or food delivery stocks If you’re more of a stock risk-taker, the best way to make money during a recession is by day trading the stock market. Larry Williams’ Smash day pattern is a simple but very effective way to trade stocks in a recession.
NASDAQ:AMZNEducation
by Tradingstrategyguides