Summary: - Technical analysis doesn’t need to be complicated - Methods like Gann theory and Elliot Waves are farcical - Using common sense and logic, the typical retail investor can develop profitable strategies - Understanding which levels are important, and the trends and momentum that is driving them is the key to success - This class will benefit any style - This class will teach you how to use the tools that will make you successful

1. Lesson 1 - Introduction to the
Benzinga Trading School
Mark Putrino, CMT

2. My Pledge to You:
▪ I will always be honest
▪ I will admit when I’m wrong
▪ I will voraciously study, learn, and read about the markets
▪ I will continuously try to improve the lectures and lessons
▪ I understand that you have your hard-earned money at stake
▪ I believe these classes will help you make money, which leads to a better
quality of life for you and your family
▪ I will always be thankful and will always appreciate your trust
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3. This Class is Different:
▪ Most trading classes are taught by someone who has read a few books, traded
their own account, and thinks they’re an expert
▪ This class is different
▪ The instructor directly for two industry titans - Mario Gabelli and Steven A. Cohen
▪ The instructor was the head of trading at three large, institutional money managers
that managed billions of dollars
▪ The instructor has a deep understanding of trading strategies and investment
styles
▪ The focus of the class is technical analysis, but it will also cover a wide range of
other topics that are related to investing
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4. This Class Will Benefit Any Style of Trading or
Investment Strategy:
▪ Long-term Value and Growth
▪ Swing Trading
▪ Day Trading
▪ Cryptocurrency
▪ Option Trading
▪ Short Selling
▪ Tactical Asset Allocation
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5. The Holy Grail?
▪ Amateur investors think there is a ‘Holy Grail’ or secret formula that works
▪ There isn’t
▪ Artificial intelligence strategies have performed abysmally and will continue
to do so
▪ People who try to quantify technical analysis are really looking for
quantitative strategies - not traditional technical analysis
▪ The best human traders still outperform sophisticated quantitative
computerized strategies
▪ The ‘Holy Grail’ is understanding investment psychology and risk
management
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6. Long-term Value and Growth:
▪ Traditional investment style…identify good investments with fundamental
analysis
▪ Analysts look at metrics such as price to earnings (P/E) and price to sales
(P/S) ratios
▪ Growth companies tend to reinvest their revenue into growing the size of
the company
▪ Value companies tend to pay out excess revenue as dividends
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7. Swing Trading, Day Trading, and High Frequency Trading:
▪ These styles try to identify and profit from short-term equilibrium
imbalances
▪ This is the main focus of this course, but it will also study a wide range of
other market and investment related topics
▪ HFT has a bad reputation, but it doesn’t deserve it
▪ Most day traders get wiped out because they guess and don’t have a plan
or system
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8. Cryptocurrency:
▪ Crypto exchanges act as brokers
▪ Same trading fundamentals as stocks
▪ Bitcoin could be doomed for failure
▪ Other cryptos may survive and prosper
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9. Investing Basics:
▪ You need to use a broker to trade stocks
▪ Never invest more than you can comfortably lose
▪ Trading while being afraid is a good way to lose money
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10. Philosophy:
▪ It doesn’t need to be complicated
▪ The Benzinga Trading School method is the result of logic,
common sense, and years of experience
▪ The focus is on important levels, trends, and momentum in the
market
▪ Understanding which levels and trends are important will benefit
any strategy
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11. Technical Analysis / Market Equilibrium Analysis
▪ Technical analysis has a bad reputation. But unfortunately, it deserves it
▪ Most technical analysts, even many of the so-called ‘experts’, don’t understand the fundamentals.
▪ They mindlessly look for patterns on charts without understanding what they are supposed to
illustrate
▪ Even worse, some analysts are proponents of farcical methods like Gann theory
▪ What technical analysis is, or should be if applied correctly, is an illustration of the supply and
demand dynamics that are occurring in a market
▪ This understanding and knowledge will help you make money. It will tell you when stocks are about
to move
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12. The Medieval Market:
▪ Picture a Medieval Market where people would come to buy and sell agricultural commodities
▪ A shrewd merchant leaves the town in order to see the supply of various goods that are coming in
before they make it to the market
▪ Suppose the merchant sees that there will be a shortage of apples
▪ The merchant rushes back to the market before the supply wagons reach it
▪ Anticipating the upcoming shortage, the merchant quietly moves around the market and buys up all
the apples that are for sale
▪ After the wagons reach the market and the products are distributed, it is soon apparent to buyers of
apples that they are in short supply
▪ This drives the price higher, and the shrewd merchant can now sell the apples they bought at a
higher price
▪ The merchant may not have or did not need a special knowledge of how apples are grown
▪ But by anticipating the imminent lack of supply they were able to profit
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13. Market Equilibrium Analysis:
▪ Prices are the result of supply and demand
▪ Shifts in supply and demand lead to trend changes
▪ Charts are pictures of mass psychology
▪ Human behavior hasn’t changed so chart patterns repeat
▪ This style of trading an analysis is an art and not a science
▪ The best human traders still outperform sophisticated quantitative computerized strategies
▪ If understood and applied correctly, technical analysis should be a study of the supply and
demand dynamics occurring in a market
▪ The ability to identify which levels and trends are important leads to profit opportunities
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14. Objectives: Upon completion of this course, you
will be able to:
▪ Understand why most investors and traders fail
▪ Identify support and resistance levels and understand why they form
▪ Recognize important trends that are occurring and understand the momentum that is
driving them
▪ Identify classic chart patterns and understand the supply and demand dynamics they
illustrate
▪ Understand different investment strategies
▪ Know when and why the media is wrong
▪ Understand how important risk management and investment psychology are
▪ How to used simple and common-sense strategies to make profitable trades and develop
trading systems
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15. Using simple and logical methods that are taught in this course
allowed the instructor to call the top of the market in February
2020 and bottom when it crashed in March 2020
▪ February 7th – Overbought and overvalued conditions in the technology sector
▪ February 12th – Overbought conditions in Microsoft
▪ March 13th – Identifying important levels
▪ March 25th – Breaking of a trendline
▪ March 26th – Identifying important levels
▪ April 7th – Identifying important levels
▪ April 15th – Understanding sentiment
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16. Technology Sector May Be Flashing a Sell Signal
February 7th, 2020
Financial analysts like to look for extreme or unusual readings in financial metrics.
This is because after extreme readings, a stock or ETF will typically revert to its norm
or reverse its trend. Both situations can provide opportunities to profit.
The S&P 500 Technology SPDR (XLK) tracks the S&P 500 technology sector.
Currently, the price-to-earnings (PE) ratio is the highest that it has been in 15 years. In
addition, the RSI momentum indicator has only reached its current level four times
over the same time period. The previous two times that both measurements were
simultaneously at current levels, a major selloff in stocks soon followed.
The PE ratio is a measurement that fundamental analysts use to determine a
company's valuation. It is a measure of a price that an investor must pay for earnings
when they buy a stock.
High PE ratios are typically considered worse than low ones because it means the
earnings "cost" more. The PE ratio of the technology sector is currently almost 29.
This is the highest that it has been in the past 15 years. The last two times that it
approached current levels were in October 2007 and September 2018. Each time was
soon followed by a major selloff.
Meanwhile, momentum is something that technical analysts use to determine whether
a security is over or undervalued. Overbought means that it is at extreme levels
above its recent average or trading range. When this happens, sooner or later the
security typically reverts to its mean. With overbought conditions, this means a move
lower.
In the past 15 years, the PE ratio and the Relative Strength Index (RSI) momentum
indicator of XLK have both simultaneously been higher than 25 on only two separate
occasions. The first was in October 2007 and the second was in September 2018.
Both occasions were soon followed by a major selloff in the stock market.
It is too soon to know whether this will happen again. However, it can certainly be
interpreted as a sign the stocks will soon see a meaningful move lower.
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17. Microsoft Reaches Historically
Overbought Levels, May Soon Fall:
February 12th, 2020
In less than one month, shares of MSFT have rallied by about
20%. This is the type of action that is typically seen at the end of
bear markets or during short-squeezes. It usually doesn't occur
after long-term rallies like it has here with MSFT. This is called a
"parabolic" move and is considered unsustainable and has
many traders looking for a selloff.
This surge has resulted in MSFT becoming extremely
overbought, a term that refers to a stock's momentum. There
are a variety of ways to calculate momentum, but they all
measure the same thing. Where a stock or security is now
versus where it was "X" time periods ago. Typically, "X" refers to
days but day traders may use shorter periods such as hours.
Longer-term investors may use weeks, months, or even longer
time frames.
Overbought means that a security or market is trading at
extreme levels above its recent average price or trading range.
When overbought conditions occur there is a significant chance
that it will revert to its recent average, meaning it will move
lower.
As calculated with a standard Relative Strength Momentum
Indicator (RSI) with the default settings of 14-week time periods,
MSFT is extremely overbought. In fact, it has only been as
overbought as it currently is twice it its history. The first was in
January 1992 while the second was in January 1997. Within a
few months after both occasions meaningful selloffs occurred.
Obviously, it is too soon to know if this will happen again.
However, when metrics that are used to analyze investments
reach historic levels, they are worth paying attention to. History
is typically a good guide.
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18. Important Levels to Watch
March 13th, 2020
The market looks ready to rally.
If it does, the strength of the rally will first be tested when the
S&P 500 SPDR (SPY) reaches the $275 level. This level was
support in the first half of this week. It was also support last
June.
Levels that were support have a tendency to become
resistance, and that may happen here. This is because
investors who bought while the market was at support are
losing money if it breaks and the market heads lower.
Many of these investors may decide to sell if there is a rally
and they can get out at breakeven. This will result in
numerous sell orders being placed at a level that had been
support. If there are enough of them, it will convert the level
to resistance.
If $275 isn't broken, it will mean the correction will probably
continue. SPY could roll over and retest the lows around
$235 from December 2018.
If resistance around $275 is broken to the upside and it
holds, it will be a signal that the market is on its way to
making a recovery.
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19. SPY Preview:
March 25th, 2020
The buyers have returned… at least for the moment.
In financial markets, prices are always doing one of three things.
They are either going up, going down, or staying the same. One
thing that is certain is sooner or later, these trends will change. And
as you can see in the following chart, the SPDR S&P 500 Fund
(SPY) yesterday broke its downtrend.
When prices are rising the forces of demand are in control. When
they are falling, the forces of supply are in charge. If prices are not
changing it means the forces are equal.
A correctly drawn trendline is a graphical illustration of these
dynamics. When a trendline breaks, it could show a change or
equalization of these forces.
In the case of the downtrend line break of SPY yesterday, it means
that for the time being at least, the forces of supply are no longer in
control. This could show that the sell-off has ended.
This doesn't necessarily mean markets will rally. They could trade
sideways for a while. But even that would be a good sign. Markets
fall much faster than the rise. It takes time to form a base that could
be the setup for a rally.
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20. Important Levels for SPY:
March 26th, 2020
For now, the market floor is holding...
The SPDR S&P 500 Fund (SPY) has held on to the
December 2018 lows around $235 a share.
It dipped below that level of support Monday, when it
closed at $222.95 a share. But it has since rebounded and
spent the rest of the week above the critical level… This is
a reminder that bottoms, driven by fear, are typically more
volatile than tops – which are fueled by hope.
Going forward it will be important to see if SPY continues
to hold above support around the $235 level. If it does, it
will be a further signal that the market is forming a bottom.
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21. SPY Preview: The Market's
Road to Recovery Takes
Shape
April 7th, 2020
The market is looking stronger by the day…
The SPDR S&P 500 Fund (SPY) broke out of its recent range
yesterday. This is the highest that it has been since March
24, when it broke its downtrend.
The technology and health care sectors drove yesterday's
rally.
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22. Sentiment Indicators Still
Say “Buy”:
April 15th, 2020
The vast majority of the time indicators that measure the psychology of the
investor crowd are neutral. But occasionally, when sentiment indicators reach
extremes, they can help predict the market's future direction.
It seems counterintuitive, but extremely high levels of bullishness are a bad
sign for the market. And extreme bearishness is good.
But the logic is simple. If investors are extremely bullish, they have already
invested all of their cash. No more buyers are left in the market to move it
higher. The only way it can go is lower.
The opposite is also true. Extreme levels of bearishness tell us no sellers are
left. The market can only go higher.
One way to measure sentiment is to calculate how many stocks are trading
above or below certain moving averages.
As you can see in the chart below, only 20% of the stocks in the S&P 500
Index are currently trading above their respective 200-day moving averages.
Although this is up from the lows in sentiment hit during last month's selloff,
it's still at historic levels of pessimism. The number hadn't dropped that low
since the 2008 financial crisis. This was a sign of investor panic and
capitulation.
The current 20% figure is still below the historical average. Every time over
the past decade that it fell to levels this low, it represented a buying
opportunity.
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23. Summary:
▪ Technical analysis doesn’t need to be complicated
▪ Methods like Gann theory and Elliot Waves are farcical
▪ Using common sense and logic, the typical retail investor can develop profitable
strategies
▪ Understanding which levels are important, and the trends and momentum that is
driving them is the key to success
▪ This class will benefit any style
▪ This class will teach you how to use the tools that will make you successful
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