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[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we are going to be joined by ARK Invest CEO Cathie Wood to discuss her outlook for technology stocks. Moneytalk's Anthony Okolie is going to get us a preview of what to expect from tomorrow's Federal Reserve right decision. And in today's WebBroker education segment, Hiren Amin will show us how you can use a popular technical indicator on the platform.
So here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get our guest of the day, let's get you an update on the market. Definitely a risk off session.
You're seeing equities under pressure on both sides of the border. We will start here at home on Bay Street with the TSX Composite Index down a substantial 276 points, 1 1/3%.
West Texas intermediate is down about 4% at this hour.
There are concerns about global growth, Chinese consumption demand and also what the Fed might deliver tomorrow.
He put that altogether in its way on some of the biggest energy names in this country. You got Suncor right now at 3990 per share, down about 4 1/2%.
I want to take a look at Barrick Gold. We are noticing a bit of a bid into gold itself and some of the gold miners are benefiting in this risk off environment. At 2682, you got Barrick Gold up a little bit more than 4% right now.
Obviously, the Fed has entered that today meeting. This is an important one for investors.
The market is anticipating another quarter-point rate hike.
What kind of indication to get beyond that of where they might be headed? A lot of questions in the market right now.
Yields are actually pulling back, seeing some money move into bonds.
You got the S&P 500 down 70 points, 1.7% for the tech heavy NASDAQ right now, let's see how it's holding up against the broader market.
Pretty much in line but not quite as much to the downside.
It down 1 1/3%. Some of those Wall Street banks and some of the rumblings out of the regional banks in the states seem to be affecting some of the shares today.
At 2789, you got Bank of America down we will call that 4%. And that's your market update.
Technology stocks had a strong start to the year after a pretty challenging 2022, but could that run continue amid some signs of slowing growth? Joining us now to discuss: Cathie Wood, CEO and chief investment officer at ARK Invest. Great to have you on the program with us.
>> Thank you. I'm very happy to be here.
>> Technology has been a very interesting space.
Let's start off talking about the investment philosophy at ARK if you are thinking about technology. What kind of thinking are we doing here? Are we doing long-term thinking?
>> Yes. The ARK investment time horizon is five years, so yes, long term. And that somewhat contrarian in this market but we think it's very important to keepan eye on how things evolve, and I think it will evolve quickly in the next five years.
>> We talk about this evolution and we'll talk about some things that perhaps you have your eye on. Everyone has been talking for several months now about ChatGPT.
Really at the core of that,we are talking about artificial intelligence. People are saying that the changes there could be swift. What are you anticipating in this space?
>> We have been doing research on the space ever since ARK was founded in 2014 and we think it's terrific that finally, something in the innovation space like ChatGPT has captured both the consumer and the business imagination and is really helping people understand that the world of innovation is changing very quickly and the changes are pretty profound.
I'm not sure if you have experiments with it, but from an educational point of view, it's going to changeeducation. Going to change work completely.
Even in areas like developers, engineering, we are seeing coding productivity go up two fold within less than a year. And we actually things that could go up tenfold.
Of course, that has been an area of great labour shortages.
I know there was also an announcement today, IBM said it was going to hire no more people in the back office.
And so for back office work, ChatGPT and AI generally is probably going to take the place of human beings.
But in that regard, it's going to take people out of some areas that are tedious, shall we say, and create other opportunities that we think are going to be pretty exciting.
>> The discussion around artificial intelligence, obviously there is excitement about what it can deliver. I have experiment and with some of these apps that you are talking about. But there is also a bit of fear and trepidation among people about change of this scale, a wholesale change almost, that it could be pretty destructive for society.
>> I think you're right. And I think that we are going to needretraining and reeducation. But these technologies are very exciting and also hold great promise for those who get on the right side of change.
So I think it just experimenting with ChatGPT, you see the powerbehind AI and you can also see how you can learn a lot of these new technologies by yourself.
For example, with natural language processing, we are all going to become programmers, effectively.
Now, a year ago, most people think, I could never be a programmer.
But now, some of our analysts have used ChatGPT to design their own website, copying another website.
And that's in less than a day.
So it's pretty provocative. I think you have to really want to engage with it and experiment and those with initiative and creativity, I think, are going to have a lot of fun and very enjoyable careers.
>> That's one of the big themes right now, AI, but I am noticing now that we are in the thick of earnings season, we have had some of the bigheavyweight tech names report, with the talk of artificial intelligence as well, it's giving it to everyone statements what they have to say about the future of the business going for. What are you taking away so far from some of the big tech names we have seen this earnings season?
>> Well, I think that the larger platforms, the larger social platforms, aretaking advertising share from the smaller ones. That's clear.
and it has been a pretty quick shift.
Yes, AI is discussed quite a bit in most of these calls, but we think it's a real risk to a company like Alphabet. I have never really enjoyed Google search myself.
I wish it could be smarter.
I'm sure we've all had that experience. Well, guess what?
ChatGPT, once they start pulling it through and including more recent times as well, I think is going to usurp search.
Now, Google or Alphabet says that it's on it, it's on the case, and it should be because it has some of the best AI experts in the world. He bought a company called team mind but somehow they have been risk-averse and open AI has stolen the march with ChatGPT.
And then the other thing with plug-ins and ChatGPT, we are trying to understand what would be the impact on Apple?
It could be that ChatGPT will diss intermediate apps with so-called plug-ins and really it just take us directly wherever you want to go, whatever website we want to go. It will just anticipated. So I think that while mega-cap Tech recently has come on strong, we are looking at the disruption and diss intermediation risks that they are facing here as well.
>> These are disruptions that will have longer-term effects on the tech sector, shape the tech sectorgoing forward.
Charges for the fact that investors are concerned about slowing growth.
We have heard that from some of the companies to in terms of their client getting a little bit more cautious on spending in the cloud and some other areas.
Also with the Federal Reserve might deliver, with the interest rate path is going forward.
What should we be thinking about for the rest of this year in terms of some of the volatility out there?
>> Well I think that, and it's really in the US that we are seeing the regional bank followed here,and I think it's accelerating, contrary to what Jamie Dimon said after buying First Republic or parts of it.
We are seeing, we believe that the Fed, because of the Fed interest rate hikes, a 20 fold increase in one year, that deposits are leaving the system and moving into treasury funds. And treasury funds do nothing but sit there.
They can't be loaned out.
They can't encourage business activity. Whereas deposits and banking systems, the other side of those, can be loans.
So we have a feeling that we have started or are in the early stages of a credit crunch that is going to be much more serious than I think most are expecting.
I think the regional bank index is beginning to telegraph that.
It has broken down, which tells us deposits will continue to outflow until the Fed reverses its position, until the Fed pivots. And we do see, you mentioned the oil price, I think it has defied most people's expectations this year, especially everyone expecting China to come back, once it dropped a zero COVID policy, and that has not happened.
So something is going on out there that is broader than even the US. We do believe that there is much more weakness in the global economy then most appreciated and I would say that it's interesting because China was shut down for so long.
I think we all expected a little bit more than we've seen.
Some consumer companies have seen some activity, but the oil market has not. And one of the things that is going on, it doesn't seem like Russia has cuts.
It has been forced to cut production and it seems like it's still selling its production at a discount, and that is beginning to affect the rest of the market.
>> A fascinating start the program. We are what you get your questions about technology stocks for Kathy Woods, CEO of ARK Invest. You can get in touch with us at any time. Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
The parent company of Tim Hortons is serving up and earnings be freed slaves quarter. The culmination of higher prices and increased customer traffic at both Tims and its Burger King business drove higher revenues. Global sales were up 10% with Tim Hortons leading the way with a 16% same-store sales growth.
We have BlackBerry conducting a strategic review of its operations with an eye to a possible separation or sale of assets. CEO John Chen says they want to identify and evaluate opportunities to enhance shareholder value.
BlackBerry is not giving a timeline for concluding its review and it cautions there's no guarantee the process will result in a transaction. Got the shares up right now we will call that 8% amid all this.
Shares of Uber are in the spotlight today, that after the ride healing company beat Wall Street expectations in the fourth quarter as revenue rose 29% compared to the same period last year.
We have been talking about AI in the program. Huber did tout its take advantage over competitors, say it's already using artificial intelligence to predict arrival times for rides and deliveries.
That stock of almost 9%.
A quick check in on the market. We will start here on Bay Street with the TSX Composite Index.
A fairly substantial 278 points in the whole, 1 1/3%.
We are definitely feeling the weight of the pullback in crude prices today.
We will be looking at other areas of weakness to periods of the border, the US Federal Reserve is at their two day meeting.
Of course the expectation for the market is another 25 basis point rate hike tomorrow.
It's what happens after that that is going to be a little bit more important than the indications we get from Fed chair Jerome Powell and company. Right now we are 70 points the whole and will call that 1.7% to the downside.
We are back now with Kathy Woods, CEO and CIO of ARK Invest. We are taking your questions about technology stocks. Loss coming in. Right off the hall, we have a Canadian name here. What are your thoughts on Shopify?
>> We are very interested in what Shopify is doing. We were talking about AI earlier and they released a personal shopping assistant based on ChatGPT 3.5 and it just shows us that they are, that this company is very progressive in terms of its investing and it is the leader when it comes to social commerce and a lot of commerce is going social.
Amazon is not a social network and Amazon will do fine but at the margin, a lot of merchandise is being bought on Instagram and some of these social networks. And of course, Shopify is the backend.
It's sales growth has been very, very strong and defied the weakness in e-commerce sales and that's because of this share shift towards social e-commerce. And the other thing that I think it's doing very well is Shopify payments. Now, while that is driving its gross margins down somewhat, it is generating tremendous revenue, they are finding tremendous revenue there as well.
>> What are some of the risks was Shopify right now?obviously, it was one of those companies.
.
.
what should we be aware of on a risk profile here?
>> As you say, they have already addressed this. They may not have adjusted enough. They had to cut back after hiring too many people. I really like it when a CEO says, my fault, as I think the CEO of Shopify did.
And I think again the risk here is economic more than anything . I think they are in a very good strategic position but if this banking crisis in the USis bad enough, I think that most companies will be impacted.
>> Okay, that Shopify. Let's take another question from the audience. What are your thoughts on Tesla?
>> Sure. Tesla, we believe, has a tremendous opportunity not only to capitalize on the accelerated shift towards electric vehicles but also to launch an economist taxi platformand we know that it is preparing to do so because it is collecting enormous amounts of data, real-world driving data, billions upon billions of miles.
And training that data with artificial intelligence in order to teach cars to get from point A to point B as quickly and safely as possible.
So it's pretty upfront about that. I don't think most people are taking that very seriously. They think it's a very… It's almost an impossible task.
But we do have a proof of concept at their and that is cruise automation in San Francisco. I recently took a ride in cruises autonomous car and I didn't sell it ahead of time where I want it to go. I waited till I got into the car and my son lives in San Francisco. It was amazing.
It was flawless.
So there are 15 cities where we are seeing an autonomous taxis commercialized, actually, and I think it's going to proliferate much more quickly than most believe right now.
>> Does Tesla have a moat around it in terms of competition?
Because I think about the fact that they seem to haverelease, in the customers, the public's mind, this first mover advantage in electric vehicles. There's a lot of competition now from the big automakers.
On this front, who could come after them?
>> Everyone is coming after them. They have two if they want to save their businesses. So there is an accelerated shift towards investment in electric vehicles, but if you think about just here in North America, electric vehicle made up I think it was six or 7% of total vehicle sales last year. That means 93%, 93-94%, were internal combustion engine, ICE cars.
And that transition from their to fully electric is going to be pretty brutal, we think, for these guys.
We have to get past this infrastructure that they built up for the last 100 years into a completely new infrastructure. And then they will also have to think about building cars equipped for no human driver. Those are two big leaps and so you are right, they are all going to try and get there but the barriers to entry or the moats, let's more correctly say moats, Tesla's battery technology is about three years ahead, we believe, of most other auto manufacturers. It has been very creative in pushing battery technology forward.
So three years ahead on batteries.
It is the only auto manufacturer that has its own AI chip.
And if you think, they are taking a leaf from Apple's book.
Apple, at the dawn of the smart phone, was the only cell phone maker to design its own chip for a smart phone and you can see what happened to that market.
it was way ahead. It is very hard for anyone to catch up to them.
Same thing in autonomous.
This chip is a barrier to entry but the most important moat is the data collection.
Billions upon billions of miles. They have corner cases that most other auto companies haven't seen yet. That means in terms of running into certain kinds of problems, rare problems on the road because they have so much driving data.
And so it's going to be a very interesting time.
Execution is everything.
>> Is that the biggest risk here? Execution on these big ideas and grand ambitions?
>> It is.
many people are looking at their price cuts today and saying ha ha, the competition is getting to them and they are being forced to price down. If you listened to Tesla's last earnings call, you have learned that Elon strategy is to keep the production lines going at full capacity and because he has a very nice operating margin, he can cut prices because his costs are coming down.
that is what happens with innovation. It follows learning curves which are characterized by cost and he has been writing that curve aggressively.
>> But the risk, the execution risk, what would it be?
>> Autonomous execution risk is can theyget from level two, three in terms of full self driving to level IV, five, and it's the last mile problem or can they get all the way there?
Their conviction has increased that they will, having taken a drive in cruise automation, I would have to re-.
Can they do it at scale is the question.
Can they do it at scale?
We believe so but many people don't believe they will get off the ground floor.
>> Fascinating stuff. As always, make sure you do your own research before making any investment decisions.
We're gonna get back to your questions for Cathie Wood on technology stocks in just a moment.
a reminder, of course, you can contact us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Okay, we are back with Cathie Wood, CEO of ARK Invest.
Take your question about technology. Love coming in for you. I find this one intriguing. Is blockchain still the next big thing?
I think about all the times that people said they didn't believe in crypto but they did believe in blockchain. I don't hear a lot of people talking about blockchain anymore.
>> We do think it is the next big thing. Actually, the best way to think about itiis when the Internet first evolved, no one thought commerce would take place over the Internet.
No one was willing to put their credit card then.
And so in the early days of the Internet, there was no payments layer included. It was just going to be in information exchange.
But now we know there is a lot of commerce taking place online and what this is doing is putting that payments layer in.
If you look at the steps of the process from merchant to consumer, there are nine steps if you include the banking industry.
And credit cards and such.
And the Internet, and blockchain technology, will reduce that to peer-to-peer, to two, and that will take a lot of toll takers out of the ecosystem and we do think it's going to be a very important global movement and, in fact, when we think of blockchain technology, we are actually thinking of three revolutions. The money revolution is bitcoin, primarily, and to some extent either. The financial services revolution is what I just described.
Some people call it decentralized finance, others the Internet financial system.
And then the third is what we call web three, metaphors, next-generation Internet and that has to do with property rights on the Internet. Digital property rights. So these are going to be very big markets enabled by blockchain technology.
>> Is there anyone who is trying to come up against blockchain technology?
Not try to get their piece of it but saying, I have something better than this?
>> I think we had an attempted thatwith so-called private blockchain's. I know IBM was experimenting and helping companies experiment.
But we never believed that would work because private blockchain's are really nothing but glorified distributed databases and they are less efficient than the more centralized databases.
So we think that competition has not proven out. And so we actually think that this is going to become a global movement.
There are regulatory roadblocks right now here in the United States importantly.
The SEC is blocking a lot of innovation and the innovation is moving offshore. I know that coin-based just announced that it was going to locate part of its exchange now in Bermuda for institutions.
So this is the risk that the United States is running.
>> A viewer just reacted to what you're saying about regulators, saying, ultimately, will regulators basically put the brakes on people using digital currencies?
>> I think it's too far gone for that.
And I think the tension between those in Congress and among the regulators who are saying, wait a minute,we are just going to chase innovation offshore, where we doing that?
We are going to lose these jobs and we are going to be dependent on other countries for innovation. That is, that is not our heritage. So I think there's enough of a debate going on and I do believe in the United States of this is going to become an election issue, a national election issue next year.
Last year, FTX, fraud and bankruptcy, set the movement back for sure.
But if you think about what happened with FTX, that was a centralized, opaque entity that went bankrupt.
The bitcoin and ethereum are de-centralized, fully transparent and auditable.
and they came about, certainly bitcoin did because of the 0809 crisis when centralized financial services, opaque financial services, landed us in a heap of trouble. Decentralized, transparent, auditable, especially now second generation of the financial crisis, it doesn't surprise us as regional banks are employed in, bitcoin, on March 10, when from 19,002 today, it's roughly 28,000.
Banks are down, bitcoin is up. It has become a flight to safety.
And I do believe that a lot of innovation, many people are afraid of it in the stock market today, but we actually think it is… That it is actually the flight to safety, the new way of doing things: more open, transparent, auditable.
Innovation solves problems.
>> Very interesting stuff. For all the conversation we've had so far about technology and the growth of technology,there something else critical to it. What is your view of the semis space right now?
Semiconductors, do we need them?
>> Absolutely. They are the gateway factor for computing power outthere and the massive amount of computing power that we are going to need for the AI age, the AI revolution.
and we know AMDE is going to try and compete in that market. But really, Nvidia has had pretty much a lock on it. Now, Nvidia is priced accordingly.
that is why, as we are trying to focus on who the real winners are going to be, we are looking for companies with proprietary data.
The proprietary data is going to differentiate one company from another because if you look at open AI and Lama, which is Meta Platforms and all the various flavours of GPT three, GPT four, what you are seeing is that they are open-source and therefore they are commoditizing this market which means it will move very quickly.
So what will make the difference?
It will be proprietary data that companies can add to all of the data out there to tune their models and make them more accurate and more successful than others.
>> Will there be a greater importance going forward on domestic production of semiconductors considering how important they are?
>> Well, I do think that the geopolitical turmoil, China,Taiwan questions, yes, has elevated this as an issue. Of course, Taiwan Semiconductor is Nvidia's manufacturer of design. We do see a shift back. It's going to take a long time, though.
>> As always, make sure you do your own research before making any investment decisions.
before we get back to your questions for Cathie Wood about technology stocks, a reminder that you in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.
com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We are back with ARK Invest CEO and CIO at Cathie Wood.
Outlook for AI tech and possible ways move forward.
What is an investor do with a lack?
>>Yes, as we just discussed, the semiconductor spacewill be very important when it comes to AI. It is critically important.
So Nvidia plays a special role.
I do think it's priced for that role and that there are other ways to play this.
And so what I would do is look at other companies and ask them about a couple of things.
Their artificial intelligence expertise.
Are they paying attention to the space and hiring the right scientists and engineers to execute? Certainly they must have domain expertise. So if you are looking in the multi-oh makes or genomics space, deep biology expertise is critical.
And then that third question, proprietary data.
Do they have data that no one else has and had they been collecting it for a long enough period of time that they can train AI awning?
So those are the three variables that we believe are going to be very important.
>> You mentioned genomics there. We have a viewer wondering about healthcare and how technology impacts that.what's looking interesting out there right now?
>> I think it will be impacted by the convergence of the various sequencing technologies.
It's no longer just DNA sequencing but also RNA and protein sequencing.
Is completed but very excited in terms of unlocking the code or the secret to life and death and helping us cure disease.
So the convergence of sequencing, artificial intelligence and gene editing we believe will cure diseases. It's actually not a futures oriented statement because it's already happening.
We have functional peers today for beta thalassemia, sickle cell disease, ATT R, so these are rare blood diseases, but there are companies working on trying to cure type I and type II diabetes as well.
The companies working on that hour, we think, are very serious and would not be doing it if they did not think it were possible.
So I think curing disease and understanding or discovering cancer in stage I, even pancreatic cancer, we believe, is going to be possible.
We are already seeing it happen in some trials, and the holy Grail would be to use the convergence of sequencing and artificial intelligence to understand when a human body or human genome is setting up for cancer. Wouldn't that be something, to identify it before it happens and to prevent it.
>> That would be a great thing indeed. Looking forward on that front. Something that affects so many people's lives. Before you go, as a final thought,how is Canada stacking up against the world when it comes to technology?
>> As I mentioned, so many companies around the world, especially the United States, are setting up divisions in Canada to tap into your AI expertise. And I actually think, given the resources that Canada has devoted to it in the University systems, it could be, an important source of comparative advantage for Canadaand North America generally. And I think this is the sort of thing, long term, that could benefit the Canadian currency. I know that in the tech and telecom booms in the past, the US dollar has tended to do very well, so it's a source of potential upside for Canada from a macroeconomic point of view as well as a tech point of view.
>> It's been such a pleasure having you on the program.
Really enjoyed the conversation.
Things are joining us.
>> Thank you. I enjoyed the conversation as well. Love innovation. Innovation solves problems. That hopefully will speak again soon.
>> Thank you.
>>our thanks to Cathie Wood, CEO and chief investment officer of ARK Invest. As always, make sure you do your own research before making any investment decisions.
now, let's get our educational segment of the day.
Technical analysis is one thing you an investor can used to analyse a stock and in today's education hit, we can look at one specific indicator, Bollinger Bands.
Hiren Amin, Senior client education Dr. TD direct investing, has more.
>> Hello, and welcome to today's education segment.
Today, we will continue our analysis on technical analysis indicators.
One question traders ask a lot is how do we track volatility when it comes to investing using charts?
So the one we will look at is called Bollinger Bands.
we will look at how to use it for trading purposes to determine entry and exit signals. We will be looking at SPY which is the broad index that tracks the S&P 500 market.
We are going to access the charts right over here and within the chart space, to get the Bollinger band, it is a study or indicator that is within the price chart itself. That's going to be found within the upper indicator section.
So we clicked the upper indicators and then we are going to select, it's the very first one there, Bollinger Bands. Bollinger Bands lends its name from its namesake. John Bollinger created this study back in the 1980s and it's widely used even today to track and various market assets such as stocks, trading and futures trading as well.
It helps us determine not only volatility but it also tells us about overbought and oversold signals. It helps us identify trends in a market but it also tells us about potential entry and exit points or breakouts out of those bands when they do occur. So we will look at how you can interpret them. So here's a Bollinger band set up. What you will notice in terms of how this study is actually created or calculated, it is composed of three bands, as the name implies. You have the upper band which is at the top, the middle band and the lower band. Now this middle band in fact is a simple moving average and it's based off of a moving average and specifically and by default it's usually going to be a 20 day moving average.
Now you can actually come in here and click on the Bollinger Bands study to get some more information about what it is but we are going to adjust it down to 20 days.
The default comes under 25 in WebBroker. We are going to set it to 20 days or hear an update that.
You will notice that I'm looking at the one year and one day chart which means it's going to capture 20 days worth of average prices there as the middle band.
Now, it is based off of a statistical measure as well.
So in the upper band and lower band calculated using two standard deviations above the moving average and below the moving average and for those of us… A two standard deviation means that 95% of the time, the prices should be moving or travelling within these bands there. All right.
So two ways traders can use this for trading purposes is a strategy known as when the prices are going to either break out of those bands, so if you see a price break above the upper band, this usually indicates an overbought condition and this is when the prices have risen too much and they may be due for a pullback.
Traders will consider liquidating or coming out of there or shorting the stock possibly.
If the prices touch the lower band, it indicates a lower soled commission. Prices a fallen too rapidly and they may be due for a bounce so traders might consider going on long positions are acting in at her shorts at this point.
One of the study is or theories is that prices are going to be mean reverting. They tend to go back to their average price and so a lot of traders will look for that and you will see a lot of them were the prices kind of circulator move in and out of that moving average. And finally, we will talk about Bollinger squeezes.
This is another thing that traders are also using so you will notice through these bands that there are periods of contraction really narrow in and then they expand out and this really represents when volatilities are contracting in them when it expands and whenever there is a volatility expansion, you see the band getting wider where you're going to see potentially a breakout in the prices. Now we don't know directionally whether it's up or down but we will see a big breakout in the prices and traders will be ready for that and trade with it. One thing you should never forget when your trading is also remember overall the trend. So always trade with the trend. That's the technical analysis 101. Trend is your friend there.
That will avoid any false signals when using the Bollinger Bands. There you have it. This is a quick rundown on how to use Bollinger Bands there.
For more learning or technical analysis content, please be sure to check out the learning sector and our technical analysis videos there.
>> Our thanks to Hiren Amin, senior client education instructor at TD Direct Investing.
Before we say goodbye, of course, we have a big event tomorrowfor market water. Our Anthony Okolie joins us now about what we've got on deck. This is the big one, the Fed.
>> The Fed is coming up on Wednesday, TD Securities outlook is that they expected 25 basis points rate was a which is in line with market expectation.it would be the 10th consecutive increase by the Fed over the past year and it would take the terminal rate to a range between 5 to 5 1/4%.
there was a pick up in the moment of core inflation.
Orange TD Securities, it's pretty much a givenand TD Securities expect the fan will respond with another 25 Basis Point Rate Hike in June.
Of course, we will have immediate reaction of that interview, the reaction of the markets with Hafiz Noordin.
He is portfolio manager at TD Asset Management.
We will have the immediate reaction to the market to the Fed's decision that day.
>> You will be a busy man tomorrow. We all will be.
MoneyTalk's Anthony Okolie. Stay tuned. For tomorrow show, we will have it David Sekera, chief US strategist from our initial research as our guest, take your questions about US stocks. You can get a head start by emailing those questions into usmoneytalklive@td.com.
Thanks for watching and we will see you tomorrow.
[music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we are going to be joined by ARK Invest CEO Cathie Wood to discuss her outlook for technology stocks. Moneytalk's Anthony Okolie is going to get us a preview of what to expect from tomorrow's Federal Reserve right decision. And in today's WebBroker education segment, Hiren Amin will show us how you can use a popular technical indicator on the platform.
So here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get our guest of the day, let's get you an update on the market. Definitely a risk off session.
You're seeing equities under pressure on both sides of the border. We will start here at home on Bay Street with the TSX Composite Index down a substantial 276 points, 1 1/3%.
West Texas intermediate is down about 4% at this hour.
There are concerns about global growth, Chinese consumption demand and also what the Fed might deliver tomorrow.
He put that altogether in its way on some of the biggest energy names in this country. You got Suncor right now at 3990 per share, down about 4 1/2%.
I want to take a look at Barrick Gold. We are noticing a bit of a bid into gold itself and some of the gold miners are benefiting in this risk off environment. At 2682, you got Barrick Gold up a little bit more than 4% right now.
Obviously, the Fed has entered that today meeting. This is an important one for investors.
The market is anticipating another quarter-point rate hike.
What kind of indication to get beyond that of where they might be headed? A lot of questions in the market right now.
Yields are actually pulling back, seeing some money move into bonds.
You got the S&P 500 down 70 points, 1.7% for the tech heavy NASDAQ right now, let's see how it's holding up against the broader market.
Pretty much in line but not quite as much to the downside.
It down 1 1/3%. Some of those Wall Street banks and some of the rumblings out of the regional banks in the states seem to be affecting some of the shares today.
At 2789, you got Bank of America down we will call that 4%. And that's your market update.
Technology stocks had a strong start to the year after a pretty challenging 2022, but could that run continue amid some signs of slowing growth? Joining us now to discuss: Cathie Wood, CEO and chief investment officer at ARK Invest. Great to have you on the program with us.
>> Thank you. I'm very happy to be here.
>> Technology has been a very interesting space.
Let's start off talking about the investment philosophy at ARK if you are thinking about technology. What kind of thinking are we doing here? Are we doing long-term thinking?
>> Yes. The ARK investment time horizon is five years, so yes, long term. And that somewhat contrarian in this market but we think it's very important to keepan eye on how things evolve, and I think it will evolve quickly in the next five years.
>> We talk about this evolution and we'll talk about some things that perhaps you have your eye on. Everyone has been talking for several months now about ChatGPT.
Really at the core of that,we are talking about artificial intelligence. People are saying that the changes there could be swift. What are you anticipating in this space?
>> We have been doing research on the space ever since ARK was founded in 2014 and we think it's terrific that finally, something in the innovation space like ChatGPT has captured both the consumer and the business imagination and is really helping people understand that the world of innovation is changing very quickly and the changes are pretty profound.
I'm not sure if you have experiments with it, but from an educational point of view, it's going to changeeducation. Going to change work completely.
Even in areas like developers, engineering, we are seeing coding productivity go up two fold within less than a year. And we actually things that could go up tenfold.
Of course, that has been an area of great labour shortages.
I know there was also an announcement today, IBM said it was going to hire no more people in the back office.
And so for back office work, ChatGPT and AI generally is probably going to take the place of human beings.
But in that regard, it's going to take people out of some areas that are tedious, shall we say, and create other opportunities that we think are going to be pretty exciting.
>> The discussion around artificial intelligence, obviously there is excitement about what it can deliver. I have experiment and with some of these apps that you are talking about. But there is also a bit of fear and trepidation among people about change of this scale, a wholesale change almost, that it could be pretty destructive for society.
>> I think you're right. And I think that we are going to needretraining and reeducation. But these technologies are very exciting and also hold great promise for those who get on the right side of change.
So I think it just experimenting with ChatGPT, you see the powerbehind AI and you can also see how you can learn a lot of these new technologies by yourself.
For example, with natural language processing, we are all going to become programmers, effectively.
Now, a year ago, most people think, I could never be a programmer.
But now, some of our analysts have used ChatGPT to design their own website, copying another website.
And that's in less than a day.
So it's pretty provocative. I think you have to really want to engage with it and experiment and those with initiative and creativity, I think, are going to have a lot of fun and very enjoyable careers.
>> That's one of the big themes right now, AI, but I am noticing now that we are in the thick of earnings season, we have had some of the bigheavyweight tech names report, with the talk of artificial intelligence as well, it's giving it to everyone statements what they have to say about the future of the business going for. What are you taking away so far from some of the big tech names we have seen this earnings season?
>> Well, I think that the larger platforms, the larger social platforms, aretaking advertising share from the smaller ones. That's clear.
and it has been a pretty quick shift.
Yes, AI is discussed quite a bit in most of these calls, but we think it's a real risk to a company like Alphabet. I have never really enjoyed Google search myself.
I wish it could be smarter.
I'm sure we've all had that experience. Well, guess what?
ChatGPT, once they start pulling it through and including more recent times as well, I think is going to usurp search.
Now, Google or Alphabet says that it's on it, it's on the case, and it should be because it has some of the best AI experts in the world. He bought a company called team mind but somehow they have been risk-averse and open AI has stolen the march with ChatGPT.
And then the other thing with plug-ins and ChatGPT, we are trying to understand what would be the impact on Apple?
It could be that ChatGPT will diss intermediate apps with so-called plug-ins and really it just take us directly wherever you want to go, whatever website we want to go. It will just anticipated. So I think that while mega-cap Tech recently has come on strong, we are looking at the disruption and diss intermediation risks that they are facing here as well.
>> These are disruptions that will have longer-term effects on the tech sector, shape the tech sectorgoing forward.
Charges for the fact that investors are concerned about slowing growth.
We have heard that from some of the companies to in terms of their client getting a little bit more cautious on spending in the cloud and some other areas.
Also with the Federal Reserve might deliver, with the interest rate path is going forward.
What should we be thinking about for the rest of this year in terms of some of the volatility out there?
>> Well I think that, and it's really in the US that we are seeing the regional bank followed here,and I think it's accelerating, contrary to what Jamie Dimon said after buying First Republic or parts of it.
We are seeing, we believe that the Fed, because of the Fed interest rate hikes, a 20 fold increase in one year, that deposits are leaving the system and moving into treasury funds. And treasury funds do nothing but sit there.
They can't be loaned out.
They can't encourage business activity. Whereas deposits and banking systems, the other side of those, can be loans.
So we have a feeling that we have started or are in the early stages of a credit crunch that is going to be much more serious than I think most are expecting.
I think the regional bank index is beginning to telegraph that.
It has broken down, which tells us deposits will continue to outflow until the Fed reverses its position, until the Fed pivots. And we do see, you mentioned the oil price, I think it has defied most people's expectations this year, especially everyone expecting China to come back, once it dropped a zero COVID policy, and that has not happened.
So something is going on out there that is broader than even the US. We do believe that there is much more weakness in the global economy then most appreciated and I would say that it's interesting because China was shut down for so long.
I think we all expected a little bit more than we've seen.
Some consumer companies have seen some activity, but the oil market has not. And one of the things that is going on, it doesn't seem like Russia has cuts.
It has been forced to cut production and it seems like it's still selling its production at a discount, and that is beginning to affect the rest of the market.
>> A fascinating start the program. We are what you get your questions about technology stocks for Kathy Woods, CEO of ARK Invest. You can get in touch with us at any time. Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
The parent company of Tim Hortons is serving up and earnings be freed slaves quarter. The culmination of higher prices and increased customer traffic at both Tims and its Burger King business drove higher revenues. Global sales were up 10% with Tim Hortons leading the way with a 16% same-store sales growth.
We have BlackBerry conducting a strategic review of its operations with an eye to a possible separation or sale of assets. CEO John Chen says they want to identify and evaluate opportunities to enhance shareholder value.
BlackBerry is not giving a timeline for concluding its review and it cautions there's no guarantee the process will result in a transaction. Got the shares up right now we will call that 8% amid all this.
Shares of Uber are in the spotlight today, that after the ride healing company beat Wall Street expectations in the fourth quarter as revenue rose 29% compared to the same period last year.
We have been talking about AI in the program. Huber did tout its take advantage over competitors, say it's already using artificial intelligence to predict arrival times for rides and deliveries.
That stock of almost 9%.
A quick check in on the market. We will start here on Bay Street with the TSX Composite Index.
A fairly substantial 278 points in the whole, 1 1/3%.
We are definitely feeling the weight of the pullback in crude prices today.
We will be looking at other areas of weakness to periods of the border, the US Federal Reserve is at their two day meeting.
Of course the expectation for the market is another 25 basis point rate hike tomorrow.
It's what happens after that that is going to be a little bit more important than the indications we get from Fed chair Jerome Powell and company. Right now we are 70 points the whole and will call that 1.7% to the downside.
We are back now with Kathy Woods, CEO and CIO of ARK Invest. We are taking your questions about technology stocks. Loss coming in. Right off the hall, we have a Canadian name here. What are your thoughts on Shopify?
>> We are very interested in what Shopify is doing. We were talking about AI earlier and they released a personal shopping assistant based on ChatGPT 3.5 and it just shows us that they are, that this company is very progressive in terms of its investing and it is the leader when it comes to social commerce and a lot of commerce is going social.
Amazon is not a social network and Amazon will do fine but at the margin, a lot of merchandise is being bought on Instagram and some of these social networks. And of course, Shopify is the backend.
It's sales growth has been very, very strong and defied the weakness in e-commerce sales and that's because of this share shift towards social e-commerce. And the other thing that I think it's doing very well is Shopify payments. Now, while that is driving its gross margins down somewhat, it is generating tremendous revenue, they are finding tremendous revenue there as well.
>> What are some of the risks was Shopify right now?obviously, it was one of those companies.
.
.
what should we be aware of on a risk profile here?
>> As you say, they have already addressed this. They may not have adjusted enough. They had to cut back after hiring too many people. I really like it when a CEO says, my fault, as I think the CEO of Shopify did.
And I think again the risk here is economic more than anything . I think they are in a very good strategic position but if this banking crisis in the USis bad enough, I think that most companies will be impacted.
>> Okay, that Shopify. Let's take another question from the audience. What are your thoughts on Tesla?
>> Sure. Tesla, we believe, has a tremendous opportunity not only to capitalize on the accelerated shift towards electric vehicles but also to launch an economist taxi platformand we know that it is preparing to do so because it is collecting enormous amounts of data, real-world driving data, billions upon billions of miles.
And training that data with artificial intelligence in order to teach cars to get from point A to point B as quickly and safely as possible.
So it's pretty upfront about that. I don't think most people are taking that very seriously. They think it's a very… It's almost an impossible task.
But we do have a proof of concept at their and that is cruise automation in San Francisco. I recently took a ride in cruises autonomous car and I didn't sell it ahead of time where I want it to go. I waited till I got into the car and my son lives in San Francisco. It was amazing.
It was flawless.
So there are 15 cities where we are seeing an autonomous taxis commercialized, actually, and I think it's going to proliferate much more quickly than most believe right now.
>> Does Tesla have a moat around it in terms of competition?
Because I think about the fact that they seem to haverelease, in the customers, the public's mind, this first mover advantage in electric vehicles. There's a lot of competition now from the big automakers.
On this front, who could come after them?
>> Everyone is coming after them. They have two if they want to save their businesses. So there is an accelerated shift towards investment in electric vehicles, but if you think about just here in North America, electric vehicle made up I think it was six or 7% of total vehicle sales last year. That means 93%, 93-94%, were internal combustion engine, ICE cars.
And that transition from their to fully electric is going to be pretty brutal, we think, for these guys.
We have to get past this infrastructure that they built up for the last 100 years into a completely new infrastructure. And then they will also have to think about building cars equipped for no human driver. Those are two big leaps and so you are right, they are all going to try and get there but the barriers to entry or the moats, let's more correctly say moats, Tesla's battery technology is about three years ahead, we believe, of most other auto manufacturers. It has been very creative in pushing battery technology forward.
So three years ahead on batteries.
It is the only auto manufacturer that has its own AI chip.
And if you think, they are taking a leaf from Apple's book.
Apple, at the dawn of the smart phone, was the only cell phone maker to design its own chip for a smart phone and you can see what happened to that market.
it was way ahead. It is very hard for anyone to catch up to them.
Same thing in autonomous.
This chip is a barrier to entry but the most important moat is the data collection.
Billions upon billions of miles. They have corner cases that most other auto companies haven't seen yet. That means in terms of running into certain kinds of problems, rare problems on the road because they have so much driving data.
And so it's going to be a very interesting time.
Execution is everything.
>> Is that the biggest risk here? Execution on these big ideas and grand ambitions?
>> It is.
many people are looking at their price cuts today and saying ha ha, the competition is getting to them and they are being forced to price down. If you listened to Tesla's last earnings call, you have learned that Elon strategy is to keep the production lines going at full capacity and because he has a very nice operating margin, he can cut prices because his costs are coming down.
that is what happens with innovation. It follows learning curves which are characterized by cost and he has been writing that curve aggressively.
>> But the risk, the execution risk, what would it be?
>> Autonomous execution risk is can theyget from level two, three in terms of full self driving to level IV, five, and it's the last mile problem or can they get all the way there?
Their conviction has increased that they will, having taken a drive in cruise automation, I would have to re-.
Can they do it at scale is the question.
Can they do it at scale?
We believe so but many people don't believe they will get off the ground floor.
>> Fascinating stuff. As always, make sure you do your own research before making any investment decisions.
We're gonna get back to your questions for Cathie Wood on technology stocks in just a moment.
a reminder, of course, you can contact us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Okay, we are back with Cathie Wood, CEO of ARK Invest.
Take your question about technology. Love coming in for you. I find this one intriguing. Is blockchain still the next big thing?
I think about all the times that people said they didn't believe in crypto but they did believe in blockchain. I don't hear a lot of people talking about blockchain anymore.
>> We do think it is the next big thing. Actually, the best way to think about itiis when the Internet first evolved, no one thought commerce would take place over the Internet.
No one was willing to put their credit card then.
And so in the early days of the Internet, there was no payments layer included. It was just going to be in information exchange.
But now we know there is a lot of commerce taking place online and what this is doing is putting that payments layer in.
If you look at the steps of the process from merchant to consumer, there are nine steps if you include the banking industry.
And credit cards and such.
And the Internet, and blockchain technology, will reduce that to peer-to-peer, to two, and that will take a lot of toll takers out of the ecosystem and we do think it's going to be a very important global movement and, in fact, when we think of blockchain technology, we are actually thinking of three revolutions. The money revolution is bitcoin, primarily, and to some extent either. The financial services revolution is what I just described.
Some people call it decentralized finance, others the Internet financial system.
And then the third is what we call web three, metaphors, next-generation Internet and that has to do with property rights on the Internet. Digital property rights. So these are going to be very big markets enabled by blockchain technology.
>> Is there anyone who is trying to come up against blockchain technology?
Not try to get their piece of it but saying, I have something better than this?
>> I think we had an attempted thatwith so-called private blockchain's. I know IBM was experimenting and helping companies experiment.
But we never believed that would work because private blockchain's are really nothing but glorified distributed databases and they are less efficient than the more centralized databases.
So we think that competition has not proven out. And so we actually think that this is going to become a global movement.
There are regulatory roadblocks right now here in the United States importantly.
The SEC is blocking a lot of innovation and the innovation is moving offshore. I know that coin-based just announced that it was going to locate part of its exchange now in Bermuda for institutions.
So this is the risk that the United States is running.
>> A viewer just reacted to what you're saying about regulators, saying, ultimately, will regulators basically put the brakes on people using digital currencies?
>> I think it's too far gone for that.
And I think the tension between those in Congress and among the regulators who are saying, wait a minute,we are just going to chase innovation offshore, where we doing that?
We are going to lose these jobs and we are going to be dependent on other countries for innovation. That is, that is not our heritage. So I think there's enough of a debate going on and I do believe in the United States of this is going to become an election issue, a national election issue next year.
Last year, FTX, fraud and bankruptcy, set the movement back for sure.
But if you think about what happened with FTX, that was a centralized, opaque entity that went bankrupt.
The bitcoin and ethereum are de-centralized, fully transparent and auditable.
and they came about, certainly bitcoin did because of the 0809 crisis when centralized financial services, opaque financial services, landed us in a heap of trouble. Decentralized, transparent, auditable, especially now second generation of the financial crisis, it doesn't surprise us as regional banks are employed in, bitcoin, on March 10, when from 19,002 today, it's roughly 28,000.
Banks are down, bitcoin is up. It has become a flight to safety.
And I do believe that a lot of innovation, many people are afraid of it in the stock market today, but we actually think it is… That it is actually the flight to safety, the new way of doing things: more open, transparent, auditable.
Innovation solves problems.
>> Very interesting stuff. For all the conversation we've had so far about technology and the growth of technology,there something else critical to it. What is your view of the semis space right now?
Semiconductors, do we need them?
>> Absolutely. They are the gateway factor for computing power outthere and the massive amount of computing power that we are going to need for the AI age, the AI revolution.
and we know AMDE is going to try and compete in that market. But really, Nvidia has had pretty much a lock on it. Now, Nvidia is priced accordingly.
that is why, as we are trying to focus on who the real winners are going to be, we are looking for companies with proprietary data.
The proprietary data is going to differentiate one company from another because if you look at open AI and Lama, which is Meta Platforms and all the various flavours of GPT three, GPT four, what you are seeing is that they are open-source and therefore they are commoditizing this market which means it will move very quickly.
So what will make the difference?
It will be proprietary data that companies can add to all of the data out there to tune their models and make them more accurate and more successful than others.
>> Will there be a greater importance going forward on domestic production of semiconductors considering how important they are?
>> Well, I do think that the geopolitical turmoil, China,Taiwan questions, yes, has elevated this as an issue. Of course, Taiwan Semiconductor is Nvidia's manufacturer of design. We do see a shift back. It's going to take a long time, though.
>> As always, make sure you do your own research before making any investment decisions.
before we get back to your questions for Cathie Wood about technology stocks, a reminder that you in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.
com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We are back with ARK Invest CEO and CIO at Cathie Wood.
Outlook for AI tech and possible ways move forward.
What is an investor do with a lack?
>>Yes, as we just discussed, the semiconductor spacewill be very important when it comes to AI. It is critically important.
So Nvidia plays a special role.
I do think it's priced for that role and that there are other ways to play this.
And so what I would do is look at other companies and ask them about a couple of things.
Their artificial intelligence expertise.
Are they paying attention to the space and hiring the right scientists and engineers to execute? Certainly they must have domain expertise. So if you are looking in the multi-oh makes or genomics space, deep biology expertise is critical.
And then that third question, proprietary data.
Do they have data that no one else has and had they been collecting it for a long enough period of time that they can train AI awning?
So those are the three variables that we believe are going to be very important.
>> You mentioned genomics there. We have a viewer wondering about healthcare and how technology impacts that.what's looking interesting out there right now?
>> I think it will be impacted by the convergence of the various sequencing technologies.
It's no longer just DNA sequencing but also RNA and protein sequencing.
Is completed but very excited in terms of unlocking the code or the secret to life and death and helping us cure disease.
So the convergence of sequencing, artificial intelligence and gene editing we believe will cure diseases. It's actually not a futures oriented statement because it's already happening.
We have functional peers today for beta thalassemia, sickle cell disease, ATT R, so these are rare blood diseases, but there are companies working on trying to cure type I and type II diabetes as well.
The companies working on that hour, we think, are very serious and would not be doing it if they did not think it were possible.
So I think curing disease and understanding or discovering cancer in stage I, even pancreatic cancer, we believe, is going to be possible.
We are already seeing it happen in some trials, and the holy Grail would be to use the convergence of sequencing and artificial intelligence to understand when a human body or human genome is setting up for cancer. Wouldn't that be something, to identify it before it happens and to prevent it.
>> That would be a great thing indeed. Looking forward on that front. Something that affects so many people's lives. Before you go, as a final thought,how is Canada stacking up against the world when it comes to technology?
>> As I mentioned, so many companies around the world, especially the United States, are setting up divisions in Canada to tap into your AI expertise. And I actually think, given the resources that Canada has devoted to it in the University systems, it could be, an important source of comparative advantage for Canadaand North America generally. And I think this is the sort of thing, long term, that could benefit the Canadian currency. I know that in the tech and telecom booms in the past, the US dollar has tended to do very well, so it's a source of potential upside for Canada from a macroeconomic point of view as well as a tech point of view.
>> It's been such a pleasure having you on the program.
Really enjoyed the conversation.
Things are joining us.
>> Thank you. I enjoyed the conversation as well. Love innovation. Innovation solves problems. That hopefully will speak again soon.
>> Thank you.
>>our thanks to Cathie Wood, CEO and chief investment officer of ARK Invest. As always, make sure you do your own research before making any investment decisions.
now, let's get our educational segment of the day.
Technical analysis is one thing you an investor can used to analyse a stock and in today's education hit, we can look at one specific indicator, Bollinger Bands.
Hiren Amin, Senior client education Dr. TD direct investing, has more.
>> Hello, and welcome to today's education segment.
Today, we will continue our analysis on technical analysis indicators.
One question traders ask a lot is how do we track volatility when it comes to investing using charts?
So the one we will look at is called Bollinger Bands.
we will look at how to use it for trading purposes to determine entry and exit signals. We will be looking at SPY which is the broad index that tracks the S&P 500 market.
We are going to access the charts right over here and within the chart space, to get the Bollinger band, it is a study or indicator that is within the price chart itself. That's going to be found within the upper indicator section.
So we clicked the upper indicators and then we are going to select, it's the very first one there, Bollinger Bands. Bollinger Bands lends its name from its namesake. John Bollinger created this study back in the 1980s and it's widely used even today to track and various market assets such as stocks, trading and futures trading as well.
It helps us determine not only volatility but it also tells us about overbought and oversold signals. It helps us identify trends in a market but it also tells us about potential entry and exit points or breakouts out of those bands when they do occur. So we will look at how you can interpret them. So here's a Bollinger band set up. What you will notice in terms of how this study is actually created or calculated, it is composed of three bands, as the name implies. You have the upper band which is at the top, the middle band and the lower band. Now this middle band in fact is a simple moving average and it's based off of a moving average and specifically and by default it's usually going to be a 20 day moving average.
Now you can actually come in here and click on the Bollinger Bands study to get some more information about what it is but we are going to adjust it down to 20 days.
The default comes under 25 in WebBroker. We are going to set it to 20 days or hear an update that.
You will notice that I'm looking at the one year and one day chart which means it's going to capture 20 days worth of average prices there as the middle band.
Now, it is based off of a statistical measure as well.
So in the upper band and lower band calculated using two standard deviations above the moving average and below the moving average and for those of us… A two standard deviation means that 95% of the time, the prices should be moving or travelling within these bands there. All right.
So two ways traders can use this for trading purposes is a strategy known as when the prices are going to either break out of those bands, so if you see a price break above the upper band, this usually indicates an overbought condition and this is when the prices have risen too much and they may be due for a pullback.
Traders will consider liquidating or coming out of there or shorting the stock possibly.
If the prices touch the lower band, it indicates a lower soled commission. Prices a fallen too rapidly and they may be due for a bounce so traders might consider going on long positions are acting in at her shorts at this point.
One of the study is or theories is that prices are going to be mean reverting. They tend to go back to their average price and so a lot of traders will look for that and you will see a lot of them were the prices kind of circulator move in and out of that moving average. And finally, we will talk about Bollinger squeezes.
This is another thing that traders are also using so you will notice through these bands that there are periods of contraction really narrow in and then they expand out and this really represents when volatilities are contracting in them when it expands and whenever there is a volatility expansion, you see the band getting wider where you're going to see potentially a breakout in the prices. Now we don't know directionally whether it's up or down but we will see a big breakout in the prices and traders will be ready for that and trade with it. One thing you should never forget when your trading is also remember overall the trend. So always trade with the trend. That's the technical analysis 101. Trend is your friend there.
That will avoid any false signals when using the Bollinger Bands. There you have it. This is a quick rundown on how to use Bollinger Bands there.
For more learning or technical analysis content, please be sure to check out the learning sector and our technical analysis videos there.
>> Our thanks to Hiren Amin, senior client education instructor at TD Direct Investing.
Before we say goodbye, of course, we have a big event tomorrowfor market water. Our Anthony Okolie joins us now about what we've got on deck. This is the big one, the Fed.
>> The Fed is coming up on Wednesday, TD Securities outlook is that they expected 25 basis points rate was a which is in line with market expectation.it would be the 10th consecutive increase by the Fed over the past year and it would take the terminal rate to a range between 5 to 5 1/4%.
there was a pick up in the moment of core inflation.
Orange TD Securities, it's pretty much a givenand TD Securities expect the fan will respond with another 25 Basis Point Rate Hike in June.
Of course, we will have immediate reaction of that interview, the reaction of the markets with Hafiz Noordin.
He is portfolio manager at TD Asset Management.
We will have the immediate reaction to the market to the Fed's decision that day.
>> You will be a busy man tomorrow. We all will be.
MoneyTalk's Anthony Okolie. Stay tuned. For tomorrow show, we will have it David Sekera, chief US strategist from our initial research as our guest, take your questions about US stocks. You can get a head start by emailing those questions into usmoneytalklive@td.com.
Thanks for watching and we will see you tomorrow.
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