TYL Short Pick Found Using Marketclub Trade Triangle Stock Screen

TYL Video Transcript

Steve Warshaw: [0:08] Hello, this is Steve Warshaw, the Trade Detective, and today I’m making a short pick based on the MarketClub Trade Triangle Search Technology. So, what I want to do is I want to go ahead and click on the ‘Recent Trade Triangles.’ In here is a list of the trade triangles. What I want to do is I want to search for new trade triangles as of today. [0:33] What I am going to do is, I’m going to select ‘Monthly Trade Triangles,’ because I like to use the monthly chart to determine the trend of a stock. Then what I’m going to do is I’m going to go search, and I’m going to only search for today. Then I’m going to hit ‘Scan.’ And here are today’s monthly trade triangles.

[0:54] Now, I’m bearish on the market. I’m looking for a bearish pick. And so, what I’m going to do is I’m going to focus on these stocks that have a score that is -90 to -100. A few of the things that I filter for are, I want stocks that are greater than $5, and I want stocks that have a minimum trade volume of at least 250,000 shares. Immediately that filters this list down to here, which is Phase Forward, Inc, we have Tyler Technologies; and that’s about it.

[1:28] Now, the stock that I’m going to analyze today is this Tyler Technologies, TYL. So, I’m going to go ahead and open the chart for TYL.

[1:38] OK, now here’s the chart for TYL. You can see with the trade triangle that at $15.04, we have a negative monthly trade triangle. Now, it hasn’t shown up on the chart yet, but it will. Tomorrow, you will see an M pointing down right here on this candlestick. And, this is a monthly chart, like I said, because I like to use monthly charts for the trend. And what we can do is see a few things in this chart that are very negative.

[2:10] First of all, what we can do is, I’m going to draw in a trend line on the Mac D here. Oops, I grabbed the wrong tool. Let me get rid of that. OK, so here’s the trend line. As you can see, the Mac D has a negative, or decreasing value. But, what you can see here, if you start from the point of the Mac D and you look at price, clearly price has gone up. So, the first thing that you have in here is a negative divergence in the Mac D on the monthly chart.

[2:47] OK, so now, I’m going to switch to the weekly chart. It’s very easy to do; you just come over here and select ‘Weekly’ from the drop down. And I’m going to go ahead and scope this in so we can see what’s going on here a little bit. I’m going to go ahead and move this out of the way. Now, there’s a few things that you’ll see right away here. The first is that there’s an obvious overhead resistance right around in here, you know, plus or minus a few cents. You can see there’s a really strong resistance going on in this chart at this level.

[3:23] You can also see that there is a rising wedge, and I will go ahead and draw that in from here to here, so in here there is a nice rising wedge on the weekly chart. And we are, at this point, there we go; at the point of breaking through the bottom of this rising wedge. That is also very bearish. Combined with the -100 score and the new monthly trade triangle negative, and then this final bit, which is today, as of today, we now have, right here, a bearish cross on the Mac D on the weekly chart; all sell signals.

[4:05] So, how low do I think this can go? Let’s go ahead and take a look. I’m going to go ahead and draw in, I’m going to get rid of all of the trend lines here, and I’m going to go ahead and draw in our Fibonacci. And I want to start from the very low and go to the recent high, and here we go. Right now, we’re approaching the 38.2 percent level, and I would suspect that there’s going to be some resistance right here at $15, or some support right here at $15. You can see that that’s acted to support before. Should that break, should $15 break, I believe that we’re going to go all the way down and touch this 61.8 percent retracement level on this particular stock, all the way down to $12.82. So, that would be a price target.

[5:01] If you wanted to set, once it breaks through, if you wanted to set a nice stop loss, what you could do is use this Fibonacci level at – let’s see if I can make it easier to see here – it looks like it’s at $15.89.

[5:21] So, let’s go ahead and draw in what I think we should do. First of all, target is $12.84. And stop at $15.90. So, I recommend going short. If the stock closes below $15, with a target of $12.84, and a stop of $15.90; for a profit of $2.16 per share. On a $15 stock that’s pretty good. In fact, that’s about 14 percent, so not a bad trade.

[6:10] That’s it. That’s my short tip for today. I hope you enjoyed this video and I look forward to hearing from you on the blog. Take care.

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