Financial Club, Blog, and Education
Hello everyone,
The meeting on Wednesday, November 12, will be optional for general members. This one will not be counted, and you can attend if you would like. The officers will be there, and depending on who shows up, we will follow different plans.
– Michael Trehan
Michael: Here is our second issue of the Market Blog! Please email me with any comments or corrections.
Indices:
For our members:
Right now, our club is tracking the technology, healthcare, and financial sectors for the most part.
Look at almost any technology stock and you will see a parabolic run upwards that hugs the upper Bollingers (other than FB and GOOGL – more on that later). This is great, especially if you had a long position, but what do you do now? You could wait for a small pullback and buy on the pullback, or you could just buy into the strength and ride out any retracements. Facebook, however, has not been performing on par with the market. This is probably because of its recent earnings, in which management said they expected more costs later on. No fundamental shift has occurred, so I am bullish on the stock. Since Facebook’s implied volatility is low, I will be carefully looking at prices and risk/reward ratios for near-the-money naked calls on it.
Aabhash, great job on predicting which way Alibaba’s earnings would turn out. In future meetings, we’ll be looking at many strategies with which we can play earnings. Although Facebook did not rise much over the past week as you said it would, I remain bullish on it for the longer term. The medical sector also has not seen the large gains you had predicted, but that was just a guess on your part. We’ll also talk about sentimental analysis in later meetings.
For next week, I am expecting a small pullback, and a continuation of the trend higher. Also, email me where you think the S&P is going to close next Friday with an explanation. If you are right within a small margin, there might be a small award.
Remember that the stock market is open the entire week, but the bond market is closed Tuesday because of Veteran’s day. Have fun.
– Michael Trehan
First of all, what is a chart? A chart of a stock graphs a stock’s price on the y-axis, and time on the x-axis. You probably are familiar with simple line charts, but candlestick charts provide more information and are more commonly used.
Look at the diagram of the chart below. The box, or “candle” is the body of the candle. Each candle represents a certain amount of time, usually a day. The wicks of the candle are technically referred to as the “wicks,” but they are referred to by their purpose (high or low) in common language. The ends of the body are formed by the opening and closing prices of the security during this time period. If the body is filled with a color like white, green, or a light color, then the security was up in that period of time, and the bottom of the body is the opening price and the top is the closing price. On the other hand, if the body is filled with a color like black, red, or some other dark color, then the security was down in that period of time, and the top of the body is the opening price and the bottom is the closing price.
The wick shows the extremes of price action during the time period. The upper wick is the line extending from the top of the body to the highest price ever reached (during the specified time period), and the lower wick is the line extending from the bottom of the body to the to the lowest price ever reached. Sometimes, one or both of the wicks are not seen because the opening or closing price is also the highest or lowest price.
Here is some more terminology: Let’s say that we have a chart where each candle represents a day, and there are enough candles to show the past year. That would be called a one-year daily chart. If each candle represented an hour, and there are candles going back 180 days, then it would be a 180 day hourly chart.
Also, be careful not to confuse candlesticks with OHLC (open-high-low-close) charts. Candlesticks have a rectangular body, while OHLC charts are lines with tick marks on the vertical line. The candlestick has many advantages over the traditional line chart. When we get into more analysis, we will see that candles can show buying and selling pressure throughout the day and provide earlier indications of market reversals. As a result, many traders use them and some even base strategies off of them. However, candlesticks do not always tell the sequence in which events happened (e.g. whether the high or low came first). Many websites, like FINVIZ and TradingView, use candlestick charts by default.
– Michael Trehan
Hello everyone!
The RHS Finance Club will begin to publish three blogs on a regular basis, and one on a irregular basis. See the Blogging page for more information and instructions if you are an officer.
– Michael Trehan
Clarification:
If I email you about the club, you should reply back. If you want to email me about the club, use the CLUB EMAIL page, even though this is a hassle. That way I know what is important.
Currently, only my VP can COMMENT on posts using his login. Later, we will see if we can have all the officers able to POST, so we can create a blog for other members (they’ll be coming!).
Our first virtual challenge is up!
Note that this is entirely optional, though VERY HIGHLY RECOMMENDED. If you were wondering about a real money challenge, that would be a possible legal issue for me.
However, officers: I was deliberating doing a real-money charity donation thing. Let me know using the club email what you think. (this isn’t a request, DO IT please).
Steps to register for the challenge:
Rules:
Information: (this is subject to change)
DATE EDITED:
Hello Members,
We will be having a table at Club Rush, which I believe is the 23rd. There will be an extended lunch. Officers will be at the table. If there is only one person allowed at the table, then it will be me.
SECRETARY, I need you to print 10 of the brochures found here.
We might have many new members, but I definitely do not want to slow down from our current pace.
EDITED:
For those of you who were there in the first meeting (10/8), I hope you now understand the concept of money, and how to obtain it in today’s society. Please make sure to do your homework; it should take about 15 minutes. Look at a financial news source daily (e.g., WSJ).
If you missed the meeting, COMING TO THE MEETINGS BEGINNING NEXT MONTH IS THE ONLY WAY YOU can be part of the club. The way the official list will work (college apps, etc.): There will be a list of people who attended at least TWO of the meetings and did at least TWO of the homework assignments. There will be another list (ideally you want to be on this) of people who attended more than half of the meetings.
You CAN make up meetings: Using the Finance Club Email page, email me why you weren’t there, what the meeting you missed was about (3-4 sentences, elaborate on the questions in the slide), and any other questions IN ADDITION to completing the homework. I will then add you to the made-up list.
Hello, world!
This is my first post, under the category “Finance.”