| April 29th, 2022 Strong Selling Pressure for SE Dear Reader, Yesterday, we looked at a Daily Price Chart of Walmart Inc., noting the stock had retraced below the Upper Keltner Channel into the Keltner Channel ‘Buy Zone’. For today’s Trade of the Day we will be looking at an On Balance Volume chart for Sea Ltd. stock symbol: SE. Before breaking down SE’s OBV chart let’s first review which products and services are offered by the company. Sea Limited, together with its subsidiaries, engages in the digital entertainment, e-commerce, and digital financial service businesses in Southeast Asia, Latin America, rest of Asia, and internationally. It provides Garena digital entertainment platform for users to access mobile and PC online games, as well as eSports operations; and access to other entertainment content, such as livestreaming of gameplay and social features, such as user chat and online forums. Confirming a Price Downtrend with OBV The SE daily price chart below shows that SE is in a price downtrend as the current price is below the price SE traded at six months ago (circled). The On Balance Volume chart is below the daily chart. On Balance Volume measures volume flow with a single Easy-to-Read Line. Volume flow precedes price movement and helps sustain the price trend. When a stock closes up, volume is added to the line. When a stock closes down, volume is subtracted from the line. A cumulative total of these additions and subtractions form the OBV line. On Balance Volume Indicator ● When Close is Up, Volume is Added ● When Close is Down, Volume is Subtracted ● A Cumulative Total of Additions and Subtractions form the OBV Line Volume flow precedes price and is the key to measuring the validity and sustainability of a price trend. We can see from the OBV chart below that the On Balance Volume line for SE is sloping down. A down-sloping line indicates that the volume is heavier on down days and selling pressure is exceeding buying pressure. Selling pressure must continue to exceed buying pressure in order to sustain a price downtrend. So, On Balance Volume is a simple indicator to use that confirms the price downtrend and its sustainability. The numerical value of the On Balance Volume line is not important. We simply want to see a down-sloping line to confirm a price downtrend. 
Confirmed ‘Sell’ Signal for SE Since SE's OBV line is sloping down, the most likely future price movement for SE is down, making SE a good candidate for a bearish position such as a put option spread. Let's use the Hughes Optioneering calculator to look at the potential returns for a SE debit spread. The Put Option Spread Calculator will calculate the profit/loss potential for a put option spread based on the price change of the underlying stock/ETF at option expiration in this example from a 10.0% decrease to a 10.0% increase in SE stock at option expiration. The goal of this example is to demonstrate the ‘built in’ profit potential for option spreads and the ability of spreads to profit if the underlying stock is up, down or flat at option expiration. Out of fairness to our paid option service subscribers we don’t list the option strike prices used in the profit/loss calculation. The prices and returns represented below were calculated based on the current stock and option pricing for SE on 4/28/2022 before commissions. | 
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