The SPY Index is showing S&P 500 stocks to be on an upswing as sectors climb to new highs. Alphatrends Founder Brian Shannon sits down with Yahoo Finance Live's Jared Blikre to discuss the volume-weighted average price (VWAP) impacts on stocks, while also commenting on the outlook for Tesla and Roku ahead of their earnings.
Video Transcript
JARED BLIKRE: Day after day stocks are putting on a hurt on the shorts. And here to provide some perspective and precision to the current market environment is Brian Shannon, Founder of Alpha Trends and Author of Maximum Trading Gains with Anchored VWAP, the perfect combination of price, time and volume.
Brian, we're going to get to VWAP in a second. But you heard Brian here talk about some of the banks, just your big-picture overview. I'm going to go to the Wi-Fi interactive. I have some of the charts that you brought along today and I'm going to be annotating.
Here's a three year chart of the S&P 500. Let me just bring up your weekly chart of the spy index here that tracks it. We got some lines and some arrows. Why don't you tell us what's going on and what you think of this market.
BRIAN SHANNON: Sure, I mean, we're clearly in a fantastic uptrend. We're above all those moving averages you see there. We had undergone that period of accumulation, which we broke out past in May. And since then, as we've made these higher highs and higher lows, it's really been a very strong uptrend.
So we've got you know first up that first level for 62. I think we might continue to see this rally run up to that level first, maybe break above it a little bit. And then, perhaps, we see a pause or rest.
And then, we could-- you know, hopefully, recoil and head higher back up to the all-time highs in there. We've got the semiconductors at all-time highs and they're not pulling back from there. So that's really some great action overall.
JARED BLIKRE: Yeah, it's really fascinating to watch and just keep track of all the new highs. I'm seeing industrials also at record highs. It depends on the index but semiconductors, homebuilders, and we were just talking about the regional bank.
So I do want to get your take on KRE. This is a KBW Regional Bank index. Looking at a daily chart here. And now maybe you can set up VWAP for our audience here and Anchored VWAP in these lines that we're looking at.
BRIAN SHANNON: Sure, the volume-weighted average price is a measurement of what is the average price over the course of a day adjusted for each share of volume. When we take an anchor. What we do is we say from a specific point, we want to measure who has control.
So that first one you have a circled, the blue one, that's from the beginning of this year. And that blue line builds throughout the year and tells us the average price at that point. So at the average price at this point now, we're back above that anchored volume-weighted average price.
Meaning, the average dip-buyer who's been buying all year and is now making money, the average short seller is losing money, and they just regained control the last couple of days. The green one below that shows from the low. And notice how when we saw pullbacks over the last couple months to that anchored VWAP from the low, the buyers came in and defended it.
So, you look at the KRE. And this is where we had you know disaster with major banks failing. And the resilience of the market in face of that is really kind of set the pace-- paved the course that is for this continued rally in the broader markets. The inability for the for them to drag the market down has been really impressive.
And now it looks like-- you know, the worst is probably behind for the KRE. And even XLF looks like-- you know, it's got a solid base at least. I don't think it's got big upside but I don't think it's got a lot of downside either.
JARED BLIKRE: Well, also taking a look at Tesla, one of our top trending tickers. Seems almost every day they're announcing earnings after the bell. We're going to be tracking that for our audience live.
I have a three year chart up on the Wi-Fi interactive here. What are you seeing in Tesla? It has come pretty far pretty quickly this year. You can see it's up 142% year-to-date and just making higher highs.
BRIAN SHANNON: Yeah, amazing run here for Tesla. And you know the fundamentals are there to back it up. We'll see tonight after the close, if they continue to or if maybe the market's gotten a little bit ahead of itself. If we can continue to run, I think that prior high late or middle of last year at about $314.
If we run up through that that might be the place where some profit takers come in. But, you know, right now, it's up, up and away. I would just be a little bit concerned over the near term that we've run so far so fast. And a lot of times, we see that the good news gets sold into on the earnings.
So, you know, the trend is clearly higher. I would not fight that trend by any means at all. And the name of the game is, you know, know where your stop is. Know what your risk is. Or more important, maybe for people who are really bullish on the stock, know your points that where it pulls back down to you could perhaps add to your position if that's part of your strategy.
JARED BLIKRE: All right, we got time for another one here, Roku. And I like your comment in the chart. As you were annotating it to me, you sent this earlier, if they don't scare you out they wear you out. And I think what we're looking at here, especially, you take a look at the three year chart. This stock has just been decimated.
And you look at the year-to-date, OK, maybe that's a bit more impressive, up 90%. But on a three-year basis, you can see it's still mired in the very low end of its range here. How do you approach a stock like this?
BRIAN SHANNON: Yeah, so, you know, if they don't scare you out they wear you out. I mean, you can look at-- there's you know, dozens-- scores of stocks that look like this. You know, PayPal. You've got-- I can't think of them off the top of my head but there's a lot of stocks that have had that huge decline last year.
They've gone sideways and now they're just starting to peak back up. So we've undergone the distribution year and a half ago, the decline, and the accumulation. Now the buyers are back in control. We're above a rising 50 and 200 day moving average.
That means institutional support is here for this stock. And just on the shorter term time frame, we had a nice rally the last week or so. It's consolidated. I just got long this stock yesterday and I think it will continue to move higher as long as it can hold above-- basically, the low of this week, which is 72.5 or so. This could be a stock that might be a next leader going forward.
JARED BLIKRE: All right, and we'll have you back to see how things are going. Always great to get your insights here, Brian Shannon, Founder of Alpha Trends and Author of Maximum Trading Gains through Anchored VWAP. The perfect combination of price, time, and volume.
