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Hey everybody. Good morning. Welcome to Stock Trading Pro. Today we have a big guest, John Napolitano, from Options Trading Pro. Very excited. We’re ending, and I think that a lot of people are calling an exhausting q1. I don’t know if there’s any other way to say that.We had technology stocks, which are supposed to be going down. With interest rates going up, they exploded to the upside. I know AI is a big part of that right now. Obviously the financial contagion, which John, I know you wrote a lot about this year. I wanna, we’re gonna dive into whether or not there were tradable opportunities.We shied away from that on my side. Just felt like the overnight risk. For me personally, it was a little bit too much. You started to see stocks that were either going up or down even after the collapse. 20% up, 20% down the next day. But I feel like there was probably some different ways to tackle that on the option side of things.So we’ll hop into that. We’re also gonna do a little bit of sector rotation on some of the ideas that are. Setting up for next week. We actually got obviously, we spent a lot of time in our community yesterday talking about if you were a hedge fund manager and you had some gains like we just had heading into the end of the year end of the year, end of the quarter I wouldn’t be selling anything right now with what’s going on with the recession and all that kind of stuff right now.I’d be kinda locking them in and I wouldn’t be doing anything and we saw volume just absolutely dry up. Y. And I don’t know if you were watching the VIX yesterday, John, but we actually had a monster move in both directions. Intra day. It was weird. There was a little bit of a disconnect.So I guess I’m gonna start out with actually, let me show the let me pop this on the screen first just to make sure that we get all of our bases covered. Did you see the same thing on the option side? Wa. Was tech from an option straight in perspective, the right play, or were there better ideas from a probability perspective?On the option side of things, on the option side of things, I found it very tricky just as well, especially what you said about the Vics. I think that I had a little bit of trouble trying to figure out what was going on. I think that, going into the end of the month, you see a lot of shenanigans go on sometimes with the Vics.Sometimes what happens is institutions are simply rolling their forward contracts. So sometimes you see uneven swaps going on between one contract and another. That could have been some of the disjoint that was occurring yesterday. A lot. See what basically what institutions do. is they hedge, obviously their risk.So what they’ll do is they’ll go out and buy one month or two month or three month vi Vic’s futures contracts to hedge their overall portfolios. That might have had something to do with some of the, intrada shenanigans, I like to call ’em. That, that go on from time to time. So yesterday I sat on my hands a little bit.However I still am fairly bullish on. I think in some ways if you’re looking for growth and momentum of any kind, and some fund managers keep in mind, have a mandate to do that. They can’t just sit in dividend stocks. They’re not allowed to. Some of these fund managers have to chase yield. Or growth.And if you, as speaking of yield, if you’re chasing yield, like I said earlier in some of my calls why are you gonna buy a dividend growing stock that yields 4% when you could go out and buy a treasury that yields 4%? So to me, the only game in town seems to be some of these tech names. Even though some of them, like you mentioned in your notes, they do look a little bit tired especially the semiconductors and so on and so forth.In situations like this, what I like to. is look at relative. During the time in which before this whole rotation thing happened. So one of my favorite names and I, we could talk about it later, is FedEx. I know you had mentioned it in your, in, in your writing as well. That was a name that actually popped, it pulled back a little and it never really tested its gap.It just stayed sideways and it, and at stage, sideways in a market that was actually going down. Pretty much. Yeah, FedEx is right here. What, let me just, yeah. Let me show this to you. . Basically you see the heavy volume, you see the spike here on earnings, whatever news this was, I believe this was earnings.And then as you can see, when it has a move like this, it’ll tend to pull back. And it never really came back in this level. It just went sideways like this. You know what I mean? And to me, when the whole market, when that particular area or sector is going down and is being beaten up, and that’s going sideways, to me that presents a buying opportunity.So I actually got into FedEx before the rotation happened. and caught this move going higher and I anticipate it. I’m gonna, I’m hoping it tests a new high here and maybe gets up to two 30. And you, like I said, you can’t have too many high expectations in a market like this. I’m not expecting it to go to two 50.I’m expecting it just to go to two 30. And in the options market, you could express that, you could do some strategies where you’re allowing. One week of sideways to go on, you could do things like vertical spreads and diagonal spreads that allow you to collect premium while you wait.Fear fear trade ID to pa play out, so to speak. John, speaking of earnings plays, I know you had mentioned the other day actively trading Lulu a little bit more. I think it was up $55 or something, if you want to walk through that option. Yeah, absolutely. I’ll walk you through Lulu. I’m gonna, let me make my screen a little bigger here.So let me go to let me type it in here. So what was cool about Lulu Lemo I like to do for earnings, by the way for Lulu or any earnings, obviously it’s very hard to guess this coin flip. , you don’t know whether it’s gonna go up or down or what have you. You could see it obviously had a monster move.No one could predict that this move from here to here. If you were lucky enough to guess, that’s fantastic. But the problem is the implied volatility in Lululemon was so high in the options market that even if you bought straight call options and had a bullish outlook on this sort of what would basically happen is you would pay too much for your premium and you wouldn’t make as much money as you would think because you’re paying all that crazy premium that’s built into the price of the option. So what I like to do, believe it or not, is on earnings day, when all the dust is settled, when all the news comes out I like to play it either as a momentum trade or as a fade.And one of the things I’ll look at is, I’ll go ahead here, the five minute. and let me just try to move here. Bear with me one second, rose. So basically here’s the move in the market, popped here. Let me try and go in here now and add. . Yeah. I’m gonna add pre-market and aftermarket.And what one of them things that I like to add is something called V A P V A is a very strong indicator. It’s something I use on my screen all the time because basically institutions they peg their orders against v a P, so it tells me, long story short, it tells me what the big boys, big girls are doing, whether they’re buyers or whether they’re sellers into a move like, So here’s the day where, here’s the aftermarket market.When the news came out, you can see it obviously in the Postmarket. And this this blue line right here. Represents vw. This is just the, this is just the 15th period moving average. I look at that too sometimes. Sometimes I look at the 20 day, but v a P is really, I keep my lines, as you can see.I don’t have a lot of indicators, oscillators, I don’t use a lot of that stuff. What I like to keep things as simple as possible, and when I saw the opening drive here, You know when the market was, when the markets were open. Let me just draw a circle here that you can see immediately on the opening drive, as you can see, it broke vApp, it went below vw and that’s telling me that you know as much as you might think, oh let’s buy it.Let’s go long. Let’s do a momentum play. To me, that’s telling me that the stock is already. after being up 14%. I think institutions, it looks like, based on this chart that they were getting ready to sell, they were getting ready to unload, maybe over the day, nice and slowly, they weren’t gonna dump their positions, but all I’m looking to catch Pete is maybe one or 2%. I’m not looking to catch this huge monster move. I’m looking to play the aftermarket where the, it already came out. The news is there, and now we have to see what the big boys and big girls are gonna. AKA the big institutions and the big banks.And to me this looked like it was going to sell off. So what I went ahead and did was I just went ahead right here when it popped above vw here, I just, I bought some put options. Now this doesn’t look like a huge move because it catches. You see a fort move here, but this was, this is about a two, two and a half percent move in the stock intra today all day long.And that’s good enough for me, Pete. You know that’s enough for me to get a 30% return on my option premium. I’m not looking to hit home runs every single day. I’m looking for singles and doubles. I want to get on base. If I could catch a couple of ideas like this a week on top of. , my bread and butter, what I like to call it, my swing trading opportunities that we talk about my basket trading.If I could do maybe a handful of these a week on top of my basket trading, that’s enough for me. That’s, that pays my bills that gives me a healthy income. That makes me happy. . John, I got two quick questions for you. How would, what would you have need to see to say E, despite the size of that move higher, we’ve seen a lot of these bullish gaps.What would you have need to see to have wanted to purchase at that point as opposed to getting short and something else you said? Institutions pegging their orders to Vwp. Could you explain that a little bit more? Yeah, so VWP stands for volume weighted average price. I was an institutional trader for 20 years, and I could tell you guys that 80 to 90% of my orders, my boss would come up to me and say, I’m not buying 10 shares.I’m not buying a hundred shares. My boss would say by 10 million chair. . Now you can’t just press the button and hit the 10 million share button because what would happen to the stock price, right? Whether you’re buying or selling, you would destroy it. So what institutions have a liquidity problem?What they have to do is spread their orders out, spray them out over the day. And one of the benchmarks that they use to track their performance is the volume weighted average price or v a p. Because what that does, it gives you the average price throughout the day based on. So it’s a good benchmark that institutions use to make sure they’re not stepping on the gas too hard or they’re not, they’re not go, they’re not pushing a stock up or pushing a stock down.So if you’re trying to buy 10 million shares, it’s a very useful benchmark to use. And, since institutions make up 80%, 90% of the order flow on the stock exchange, most of the time, it’s pretty important to watch. And so basically my entry point, I look for a closing handle, either above or below VW to confirm what direction I should go in.Now, sometimes it’s choppy, you might get a situation where it breaks vwp, it comes back down, it breaks, it comes back down. You know what? Then I get stopped out, or I’ll pull out of the trade and I’ll just wait a few more minutes to see what. But usually there’s, in the case of the Lululemon, like you can see, like I showed you, it was a pretty, it was pretty much getting sold off all day.Slowly. And that’s something I took advantage of. The first que and the first question was, I forgot the first question. We looked at Lulu and it got below V up and it, and your words at that point, it looked tired and you put on a short sale. It was a day trade that at that.Most of your stuff is swing trades, but on the day trading side of things, what would’ve told you that it had more room to go? Cause we get a lot of questions at it. It had this big move, it’s done, and then you see the stock going another 10%, the first done opposite. So I look at a couple of things.VW again if I see if the opposite happened I was direction agnostic. When I woke up in the morning and saw Lululemon, I had no clue whether I was gonna go long or. I had no conviction. I had no opinion. And that’s a good thing to have sometimes is to have no. . So what I did was it’s the same rule.I’ll look at v a and I’ll say, okay if I saw a five minute closing candle above v a and if, and it stays above v a if it looks like it’s just if vwp starts to slope higher, for instance. So Vwp is one of the things I look at really closely. I look at the slope, I look at the five minute chart to make sure that I get some closing candles above.you’re looking for volume too. You want to see some volume in there. Make sure that it’s, they see some momentum. You see some strength. Now you might not catch the perfect price. Now the trade off here is that you’re getting in a little late. But again, I’m not looking to make a home run.I’m looking to, go in the right direction making sure I’m picking the right direction, number one. And number two, I’m looking for singles and doubles. If it gets tired or it, my end, my exit by the way, would be if it breaks v a if it goes below v a in that case, or if it just starts to get tired if the slope of v a starts to slow down, if the volume starts to dry up.Those are the three main components I’ll look at. I’ll look at v a volume and slope. And those are the things I look at. And it’s a pretty useful tool. I find it to be a simple tool and works a decent amount of the time. So that’s one of the things I, that’s one of the things I look at all the time when I’m day trading.So I wanna hop on over, I wanna share the document that we’re working off of right now for sector rotation. I wanna get your insight on. The way things are closing right now and whether or not we’re actually seeing a reversal in a larger portion of the market, or are we seeing what a lot of people call window dressing?And does window dressing even exist? I guess from an institutional perspective, maybe you could chime in on that, but we’re starting to see advanced decline lines firm up a little bit. And it’s not just over a day or two, we’re actually starting to see it now where the entire week where it’s very choppy.Heading into recent price action and zooming out a little bit. You can see yesterday was a little bit neutral, but this is the last five days and that’s a little bit more broad based and it’s gotta make you sit up a little bit. So I guess the question is number one, are we starting to see a broad.Rally in the market and we could knock this out in two different ways. This is actually the monthly last 21 day performance in the s and p. And then you break it down a little bit to the last week. Boy, that’s a lot of green on the screen. Yeah. I guess what I want to ask John is, are we looking at The market, ignoring the Armageddon headlines, is the stock market now getting to a point where it says it doesn’t matter?We’re the market’s a discounting mechanism and stocks are now, and sector rotation is getting bullish across the board? Or are we seeing institutions doing nothing now and then we’re just floating up to NQ one before the. Financial stocks report earnings within the next two weeks. Right now it looks like a float up, but here’s the thing about a float up.When there is lack of news, lack of data. I know we had the banking situation a couple of weeks ago that obviously seem to die down, so since that has died down and some of the ba some of the better quality banks have caught a bit now I feel that when there’s lack of news, when there’s lack of like economic data, there’s little pieces here and there.We had employment yesterday and, But basically we’re, and like you said, we’re waiting for earnings to come. What I love to see is the drift I wanna see? Is the market drifting higher or is the market drifting lower? And right now, like you said, the market is drifting higher.That’s actually a fairly bullish indicator. It shows that, you have broad kind of bottom feeding going on, the only thing I would like to see, which makes me a little bit apprehensive, is more volume. I’d like to see a little I want to see, like I said, more of the big boys and girls stepping in.Right now it looks like they’re picking around. So it’s still a wait and see. I wouldn’t just I’m definitely, I’ve gotten a little more bullish this week. But I’m not like all in, I’m not saying, oh wow, this is the start of something that’s not something I think, so I’m gonna actually take that over, back into sector rotation.And have a different question for you. Let me bring this in here. If we start to break things down a little bit more, and I wanna specifically talk about this group over here, the technology group, and from a, from an options trading perspective. How do we see this? And I’m gonna first wanna talk about some of the stocks that are breaking out.And by the way, I just wanna come back on the screen real quick. The document that we’re looking at right now, you can actually get a link to it in the description below the video. And there’s also a link in there I’m about to show you to John’s got an option trading bootcamp that’s starting suit.So if you wanna learn from somebody who’s an institutional trader on the option side, you just heard ’em talk about buying 10 million shares of stock. Click the link below and I’m actually gonna show you how to access that right now as well. If you click into the document, you’ll see over here on the top, you can go hop on over and learn about John’s option stuff.But here’s the thing I want to talk about. We actually have technology such, right? And obviously the big dogs are rallying right now. Apple, Microsoft meta is actually holding that bit after the layoff. That’s all looking good. We’re watching Oracle right now, but the one that I wanna talk about the most, and from a probability perspective, and the next options.is we are now counting what we call melted candles. A lot of people know is a doji, but I use the word melted candles because they represent indecision where all of this trading happened and it opened, it closed in basically the same spot. So we all know what Nvidia has done, right? This is basically the start of the year, but now we have 10 consecutive melted candles.So 10 days in a row. It’s not a small amount of, that’s not an hour. 10 days of trading where it basically opened and closed at the same. Is there an option straight in there long because now the stock has paused and AM MD can throw into that mix as well? Or is the stock showing us that it’s tired at this point and we should be looking for a different situation where if we buy options there, we might get chewed up in premium.Yeah, if you buy the wrong option, you’ll totally get chewed up in premium. That’s, the whole idea of options is to, is not just to, first you figure out obviously what direction you want to go in, whether you’re long and short, I’d long Nvidia to tremendous uptrend. Yeah, you’re right. It does look tired.It looks like it might have a pullback. Absolutely. There are tons of option strategies you can do for something like that, depending on what your ultimate target is. Depending on how long you think it might stay sideways or tired. Or if you might think it’ll pull back, you could even play a pullback on the long side.Wait for that pullback to come in, collect some premium, and then play the bounce. So just as an example, If I was to trade in Avidia, right the second, I would probably, if you look at that, what you’re seeing is a base and then a breakout where your two lines are right there and what it’s doing now is it did not retest that area.So it’s actually being stubbornly high, even though it does look a little tired. And it does have that little reversal candle at the top right there. That little dodgy on the very, yeah, if you go all the way to the top there that red one in the. Yeah, right there. Yeah. So basically I would, that has diagonal spread written all over it.A situation like this is, I would go out a couple of months on something like that. I would give my option plenty of time, because remember, when you’re buying an option, your biggest enemy is time. When you’re a buyer of an option, you’ve faded a k. that you have to be, that you have to monitor and concern yourself with.What you’re essentially gonna do is you’re gonna use time to your advantage. You go out on your long leg a couple of months, or even three months, you can even go out four months. Give yourself plenty of time. Remember, you’re not gonna stay in this trade. Just one of the biggest mistakes option traders make is they’ll buy an option based on how long they think they’re gonna stay in the.What you need to do is allow yourself more time. And we talk about that in my classes. What’s the optimal expiration date to use? What’s the optimal strike price to use to capture all that? So I would go out a while on something like that and what I would do is maybe sell weekly premium against it.I would pick a target that’s above the current price because I’m bullish. But I would essentially pick some sort of a shorter term target where I think it might go. You could also do a calendar spread if you think it’s gonna stay dead sideways. If you think it’s gonna stay dead sideways you could do something like a calendar spread.If you think it’s gonna move slowly higher, maybe melt up a little bit, you do a diagonal spread. If you have a firm target on something a little more conservative and more set, forget strategy, you would go with the vertical. All strategies we teach in our classes. Do you think that buy not buying enough time to allow the trade to play itself out is one of the bigger mistakes that cuz they’re basically forcing it to work quickly?It is. The biggest mistake that I see option the traders make what they’ll do is they’ll essentially, and the reason why, I mean it’s not necessarily their fault, it’s they’re looking at cost. They’re saying to themselves, they think in terms of risk management, which is a good thing, right?they might look at a, let’s say let’s go back to Nvidia for a second. Let’s say they have a one, let’s say they have a two week target on it. They think it’s gonna break out. Let’s say you think it’s gonna stay sideways for another week, but you think eventually it’s gonna break out to a new high.That’s your theory, right? . You might, a typical auction trader might only go out maybe three weeks or maybe a month. And what’ll happen is time will start to tick away at that call auction. That they’re long and it will not give them the return that they want. Now the reason why they do that is because it’s cheaper.If a three week at the money call option is cheaper than a four month at the money call. So what happens is they’re thinking in terms of, oh, I’m not putting as much risk capital in the trade, but what they’re doing is they’re getting melted away. Keep in mind when you’re buying an option, you’re buying an ice cube, it melts away every daySo you have to, you have to allow for that. And the way to do that is to allow yourself enough time, even if you’re spending a little more money and then sell premium against it, try to work out some sort of a spread strategy at all times. 90% of the trades that I do, by the way, Involve a spread of some kind.They involve either a vertical diagonal calendar like I mentioned, or a credit spread. The Lululemon example that I showed you, that’s 10% of what I do. I’m gonna run through the sector rotation that I’m looking at right now, and maybe John to finish things up. If you have any ideas that you’re looking at right now, we can share those.To finish up, I’m just want, I wanna make sure we deliver what we promised today, which was talking about the sector rotation. So I just wanna work through this with everybody obviously. We just briefly mentioned the advanced decline line, but this is the way we are for the last five days, so there’s a lot going on right now.What’s interesting about new ideas right now is not a question of whether directional calls are easy to spot right now. Right now it’s a question of whether or not there’s enough reward left in the trade to justify accepting the risk. So we talked about we could use actually McDonald’s as an example.I don’t know if everybody’s been watching this stock recently, but finally took. And now you can see it’s well beyond what it normally does. So it’s not a question of whether or not it’s a buying opportunity, it’s a question of whether or not buying it right now makes sense for it following through.So I wanna keep that in mind as we’re working through. So we’re actually setting up some trades from a rotation basis for next week. So you can actually see the green across the board. So working our way into it, industrial stocks. Actually Boeing yesterday has been off of the list for a while and you can actually see here it actually Boeing and Caterpillar both traded below the 50 period moving average for a bit.Caterpillar actually got downgraded this week and went into a four day rally after the downgrade. Another reason just to read the tape and not re not trade the headlines, but Boeing actually had some news yesterday about their 7 37 s Good news if you’ve been trading Boeing and from. From a rotation perspective, we all know that the Dow and John, I know you’ve spoken about this quite a bit, the Dow actually carried the market to N 2023, where the NASDAQ really wasn’t doing anything.Now, trying to reverse it would be interesting. And we actually mentioned this recently that the way that the industrials carried the market and the tech carried the market. Now rotation is fairly easy to spot as long as you have, a process. Be tracking it. And I wanna get back into the theme that I was talking about before.Are we seeing. End of quarter, do nothing, keep the gains, or are we actually seeing rotation now? This is the big part that everybody needs to pay attention to. Is one day of rotation’s not enough? It’s exciting. It’s, it’s easy to spot. You just saw, we looked at, in Boeing, we wanna start adding days that lead into weeks.And all of a sudden now if we can see the financial contagion, which I’m not saying it’s done, but if the financial contagions, the market starts to feel like that’s under control. And industrials and technology, and even we’re gonna talk about energy here. If we start to see a broader based move, that’s where you can start to hold trades a little bit longer.Right now, we’re in a cash flow type mode. If we start to see this rotation following through for more than just five days, boy, you gotta sit up in your seat, belly up to the bar and start to hang onto trades a little bit. So advance the client looking a little bit better. So again, we’re building an argument right now, whether or not this is q1, don’t do anything versus q1 something special’s going on and ignoring the headlines and quite frankly, discounting all of this stuff that’s going on with interest rates and that kind of stuff, and saying no that, the worst of that plate itself.In 2022, we’ve seen all of that play itself out, and something we’ve been talking about a lot in our community is the fact that right now we’re actually above the price from a year ago. This is basically last May, so basically a year ago. We’re well above that. We’re back above 400. Has it played out?That’s the big thing, right? That’s the big argument that we’re talking about. Is it played out or are we gonna continue to listen to the Armageddon headlines? Everybody knows the market discounts into the future. We’re not buying. 2022 cash flows anymore we’re buying going forward, which now with earning season coming up, especially starting out with the banks, I actually think Bank of America’s probably the first one.Are they going to lower guidance or are they gonna say the worst of it’s behind us if that happens, I’m not saying it’s going to, if that happens. And good trading really comes down to lining up both sides of the trade. Look, stocks are going up. We’re always paying attention to which stocks are showing relative weakness, just in case we have to shorten the market rolls over.But what if these stocks that are showing relative strength and pushing up and sideways that look tired? What if they’re not tired? What if they’re just taking a break waiting for some of these other groups to come in? Boy, you better. Be patient right now while that’s unfolding, cuz you wanna have capital to take advantage of it if that ends up happening.The other side of the tape is obviously we’ve seen some really strong sectors. Obviously technology has been carrying the load for the bulk of the market, specifically diving deeper into industry groups, semiconductor stocks, right? If that does not play out and we start to pull back a little bit, then we’re gonna have a little bit more two-sided trading probably on your option side, John, where there’s gonna be a lot more opportunity to have spread type positions where you’re gonna be able to sell premium, buy at the right time, and work.Despite what the market’s going. So I just wanna finish up and then maybe we can get into a new option straight. I just wanna make sure I deliver on what we promised today. Again, everybody can grab this link below the description in the video. So we got a breakdown in Boeing there, technology, a couple of new stocks breaking out.I don’t know if anybody ha has happened to be watching. Rambus, intel, and especially Workday. , really big energy candlestick here on Thursday, traded into a melted Wednesday melted candle, but you can see the room. It has to go here. Intel waking up from the dead. , finally got through this level.We’re waiting for Micron to do the same thing. It got up to this level. Looking for this to pop above 64, so again, rotating through Apple, Microsoft meta, carrying the load, Oracle resting right at a big breakout level. This 90 level has been a big level for going back all the way over here.Couldn’t get through this level, and it finally got back here again. Wow. We’ll see. Can it get above 90 and stay there? I don’t know. Energy stocks now continue to catch my eye. This is very important what we’re about to say here. They’re not bullish. But they’re less bearish. And that’s something that we talk a lot about in our community.Being bullish is not the same thing as being less bearish. Less bearish is I don’t wanna be fat anymore. That sound, that’s very different from I wanna be healthy and fit. So right now the energy stocks are doing this, but they’re not screaming buying opportunities yet. There are a couple of opportunities from a rotation perspective that are interesting right now, and we’re looking at Oxy v l o, but more specifically you can see v l O finally broke here, but o MPC is resting right at that breakout as well.And now pauses two days above Here, you can see it’s up a little bit again this morning. I know that’s a lot. If everybody wants to get the link to what we just went over, so you have the. You can click and get the link below the video, also below the video. And in that list you can actually learn more about John’s Options trading program, which is coaching program, which is starting soon.So John, I know that was a lot taking over. Is there anything you wanna talk about? You can actually share the screen here. Yeah, absolutely. The way I look at it is this, so back to, back to what you were saying, Pete, about sector rotation and, where are we? I’m in the camp where I don’t want to be fat anymore.I’m not ready to hit the gym and, start lifting weights just yet. I think what I want to do, what I really want to do in the next week, particularly as we get into bank earnings, like you said, is really just do some old school chart analysis on the sector. What I wanna see is sector by sector.I’m gonna go, what I’m gonna do on Sunday, I’m gonna sit here and I’m gonna go through every single sector. I’m gonna just pull up industrials really quick. And I’m gonna say to myself, how does this chart look? Does this chart look healthy? Does it look not healthy? Now, right now, all I have right on here, let me make my screen bigger.I’ll just use industrial as an, as a quick example. I’m gonna go through all 10 sectors and do this every, basically every Sunday night when the market’s quiet, when there’s no noise, when there’s no, when there’s no news headlines or anything like that, I’m gonna say to myself, okay, does this chart look good?Or does this chart look bad? Now I only have the 50 day moving average. Everything below the 50 A to me is still some. Bearish. Now I know it came off the bottom here and it made its way up, which is fantastic. That makes me less bearish. It does not make me bullish. So that’s really like what, to add to what you were saying before, I’m gonna wait and see if it could hold this 50 day, make its way back up here.If that’s the case, then I’m gonna start heading the. That’s when I’m gonna start adding some of these names. Now there are individual names obviously that probably look better than this chart, like you mentioned. You mentioned McDonald’s. Just for comparison purposes, if I go here look how McDonald’s shot above the 50 day moving average.So if you’re comparing, the consumer sector to McDonald’s, it probably looks a lot better than its overall market. So that’s thing to mention is I’m gonna have a list of outperformers names that have done better even when they’re sector. Has not necessarily done that. Great. Those are the names that I want to be in.I want to be in names that have strong relative strength. 10 years ago, I would I would not be like that. I would feel like I’m chasing something. as an experienced trader, I realize that like stocks tend to go higher longer than you anticipate, and stocks tend to go lower longer than you anticipate.So to me, I want the stocks that are relatively outperforming in the sector. When that sector breaks out, I am going to start to add some serious volume. I’m gonna start to add some serious size, and then I’m also gonna change my option strategy. If the sector start to break out, I’m gonna be ready with capital.I’m gonna start doing long calls. I’m not gonna do those spread trades that I just mentioned to you. I’m gonna get a lot more aggressive and I’m gonna get a lot more aggressive very quickly. That hasn’t happened. Right now we’re still in this kind of choppy environment. I know we’ve had a good couple of days.We had the rotation, but it’s still a wait and see. I wanna see volume, I wanna see some follow through, especially going into earnings like you said. So we’ll see how that goes. In the meantime, I have my dry powder already and I’m doing plenty of option trades to keep me busy in the meantime collecting premium, doing spread strategies and stuff like.I wanted to touch briefly, John, maybe we could finish up on this comment that you had just made. And I think that’s really more of a comment from those of us that have been trading for a while where you would feel like you were chasing the stock or chasing Oh yeah. And you’re like, oh, it’s gone 10% in, five days or something like that.And not to date ourselves. I do have a lot of gray hair, but back in the day it was a big deal if a stock moved 10% in a month. Now we’re seeing stocks move 10% in a day. Yeah. And that’s even including after a. A lot of people are saying is that normal? And it’s tough for me to have a direct answer on that.And maybe you could see if I, if you’re thinking the same way I am now. I think that it’s the new normal. I think that the way that algorithms are now programmed to. Hop on all the same price levels at the same time. We’re not seeing them push up and pop pull back the way. Specialists, I remember when I first started day trading, there was a clock in the office that at every day at 10, 10, like 40 minutes after the market opened, if a big stock moved up to the upside, it would start floating back in the other direction so the specialist can start to get their money back cuz they took the other side of that.Big move higher. I feel like we’re in a new paradigm right now, which is the most amazing time to be trading because if you get these moves where it gaps or even just starts again, we can even use I’m gonna share the screen. I’m gonna talk about Boeing. Cause this was the trade that we just absolutely was all over a couple of days ago.Here. Once these stocks start to catch a bid and the algorithms start to hop on board, this was such an easy $4 trade that the commun, oh, I’m not even sharing my screen. screen. This move right here, Boeing, which was on the 28th. Once algorithms start to hop on board, they don’t come back. So essentially what I want to get across to everybody right now is number one, it’s the most exciting time to be an active trader right now, whether it’s options or stocks, the consistency in the percentage gains.I’ve never seen this before. And getting back to what we’re saying before about algorithms are not only programmed for levels, but everybody knows all the AI stuff that’s going on. Now, they’re also programmed for headlines. So as soon as that thing is coming out, they’re piling on and then when it doesn’t pull back, they’re like I have to through it cause that’s what everybody else is doing.So that’s. The other side of that though, which is if you get caught on the wrong side of a trade and this starts to happen, you are going to get crushed. So there’s no such thing as mental stop losses as far as I’m concerned. I’m gonna give you like one dramatic example in a stock that you probably would never have been thinking about this stock actually doing this.And it’s u a l this bad boy over here. Like you can see like where it’s unfolding, right? And I really wanna bring this point. Just see it unfolding. Boom, boom. Going down pretty hard. What would you be looking to do at that particular moment?Who wouldn’t be looking to short this? You got some room to go to the downside, right? And then you get that? Yeah. Wow. You get that outta nowhere. I think it was like a 50% move in the other direction. Like some crazy number. Actually, yeah. It actually even went higher. 40, 43% in 10 days. Okay. If that doesn’t tell you two things, and we covered this in a little bit of detail today, don’t predict just pay attention.we get a lot of people say, where do I think it’s going next month? What’s it doing right now? That’s all the information that we have right now, and if you good, you get good at that, which we call tape reading, you’re always gonna be on the right side of the current price action. Then when you add more pieces to the puzzle, like sector rotation and order flow over days, weeks, and months, you start to really build an argument for a great.But just as exciting as that is, you’ve gotta pull the plug on a trade that’s not working. You get caught on one thing like that, you blow up your account, period. So it’s awesome and discipline. You need both of those right now. Things are definitely happening f happening faster than they did 10 years ago.Without a doubt. And you, especially with stock trading, you guys have to use your stops. Stock trading isn’t something I do every day, but obviously I’ve done it in the past. You need to have a stop in place with this kind of stuff. You go to the bathroom and come back and you can be finished.So you have to be really careful. With options it’s a little bit, in some ways options are good because, you have to find risk with your premium size, but still you need to be careful in these types of environments. Volatility’s priced in to the options, prices. You have to allow for that.And you have to be on the right side of the trade. Like you said, the way to do that, like you said, is not worry about what’s gonna happen, trade what’s in front of you see what’s going on. That’s why I’m excited to see this rotation. I’m excited to see more sectors catching a bid.That’s fantastic. And healthy. It’s not healthy when you only have two sectors taking the market higher, and that was the case previously. Now, if these, even if some of these sectors do roll over, if even if half of them start to move higher like industrials or financials, some of the larger sectors, I think it’s a very healthy thing for the market.And that’s what I’m hoping happens. Hoping what happens up maybe you can make a quick. A quick recap or a quick review of what goes on in your coaching program to get some people in there and excited about it. Yeah, absolutely. So my, my bootcamp starts on Monday, April 3rd. For those of you who are interested, go to our website and sign up.The link is in the description. Oh, it’s, oh yeah. So basically, Yeah, so basically I go through my entire strategy and my strategy involves obviously both long and short-term ideas, but it talks about how I look at my basket trading style, how I do my top-down approach, and most importantly, which I think it’s overlooked with new option traders is the right strategy selection.Once you decide that you’re bullish or bearish at that point, what strategy do I use? And that’s where the coaching comes in. That’s where, the Discord channel comes in. That’s where our weekly coaching calls comes in. The bootcamp involves basically four live coaching calls from me.So we cover a specific topic plus live question and answer session for you guys. So it’s a great way to get your feet. It’s a great way to get started and it’s a great way to learn a fantastic revenue stream. And again, it’s something if you just do swing trading options, it’s a great compliment to what Pete does, obviously.But also it’s a great thing if you’re working full-time. It’s a fantastic way to make an extra income while you’re working. You don’t have to be glued to your screens all the time unless you wanna be. Obviously there is shorter term option strategies too, which I teach, so it’s a little, so it’s a little bit of everything, but it basically goes over the fundamentals of how to look at things, how institutions look at things and the importance of that.So that’s, if somebody’s working full-time, can they still take your options? Bootcamp. 100%. So obviously there’s recordings to watch. You can rewind them and play ’em as much as you want. And there’s four live sessions to follow up on those recordings, to make sure you guys understand all the terminology and all the stuff that’s involved for, it’s basically designed, me and Pete sat down and we went over the curriculum.It took us a while to do. And we wanted to make sure it appealed to everyone in the sense that if you’re brand new and no absolutely nothing, you’ll walk out of there knowing a tremendous amount, obviously, and you’ll be able to do some actionable stuff. But even people who are very seasoned go through my program and there’s always one or two things, even in the recordings that maybe they under, they understand what I’m talking about.But there’s one or two things that, hey, I never knew that did that for that reason, or that did that for that reason, and stuff like that. So there’s always new stuff to. . So it’s great for season traders as well as as well as brand new option traders as well. I think one of the things we, the day trading side of things is very alluring and exciting to people, but I think when push comes to shove, I think most people don’t wanna be glued to their machine and they wanna be able to put on a trade that lasts 10 days, maybe two weeks, maybe even a little bit longer, and then do it again.I think that’s really what people. . Yeah, absolutely. And one of the things with options is great. You could start at your own pace. You could start at your own pace. You could, it’s defined risk most of the time when you’re dealing with my strategies and you’re looking at things where you’re putting together a basket of let’s say 10 options, trades, and it might not be a tremendous amount of capital.But you’re gonna be long and short at the same time. Like based on sector rotation like we talk about. So you might be long energy, you might be short technology or vice versa. And your overall portfolio will be hedged. It’ll be it’ll be a it’s not gonna move around so violently where you’re gonna be like, oh my god, glu to your screen all the time.So one of the things I like to do is I put on trades in the Discord channel. I do daily alerts, but I tell my students, put in, put on things, gradually, don’t just slap on 20 trades in one day. What you’re gonna be doing from a swing trading perspective is managing a portfolio much like a hedge fund manager does.Much my boss is back when I used to work for a big fund. We look at the context of the whole portfolio. We don’t look at the context of just one or two names. We don’t have one or two favorites that we look at that we just keep trading over and over again. I trade new stuff every single week.My watch list changes every single. based on my top-down analysis, based on what I think the sectors are doing, what the markets are doing. And I add a nice, attract things from my basket as things unfold. . John, maybe you just mentioned basket trading and building a portfolio. I think a lot of people think about building a portfolio as something really complicated.Maybe we could schedule a follow up call where you get into a little bit more of the structure of building a portfolio and doing that with baskets. And I think a lot of people would be surprised that it’s relatively easy to do. Once you have the structure, you understand how to set up the options trades.What I think also what a lot of people want is to sleep better. . Yeah. So everything is not lumped into one position that’s either do or die. In that position, you’re spreading out the probabilities, which actually increases the probabilities if they’re, yeah, it allows you to sleep at night. I tell people I, I wouldn’t be able to sleep if I had one or two names overnight.If I have 30 names overnight, I sleep just fine because I don’t have all my eggs in one basket and I have small defined risk per each one. . And it might sound a little complicated, but it’s not. The reason why it’s not is it’s simple. As a b abc, I simply grade the market. I give the market an A, B, C or a D, and I decide whether, how much I want to add, how much I wanna subtract, what I want to do long, and what do I want to do short.Once I do that’s when I get into strategy. Do I want to do a straight call, straight put? Do I want to do a vertical diagonal? We talk about all that in our classes. Very simple rules to follow. And it’s just a matter of following those rules and sticking to. and knowing when to make changes.When things change dynamically like they did this week with sector rotation, you can’t just sit there like a deer in the headlights. You have to start making some changes. So start adding industrial, start adding some communication names, or consumer names. And start maybe lightening up on technology.Those are all things that I talk about intraday. During our I do a weekly recap. So if anything changes during the week, all you have to really have to do is listen to my recap and I talk about, Hey, listen this is what changed since last Sunday and this is what you need to maybe look at going forward into the weekend.And that’s, that’s something I do as well. Okay. We’ll definitely get that on the calendar then we’ll make sure we email every. So you can get the research document that we just reviewed in the description and you could also learn more about John’s bootcamp, which starts next week.Options Trading Bootcamp in the description as well. All right, John, thank you so much for being here today. Really appreciate it. Everybody who’s out there end of q1, let’s finish Q1 strong and earning season coming up. So have a great weekend everybody. We’ll see you. Take care everybody. Take care. Take care.