Stock selection for traders Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. [ Y)

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William Evans
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2 We believe in the power of investing to transform peoples lives. We look at the world through clients eyes. We re here to serve you Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 2

3 Important information For the sake of simplicity, the examples in this presentation do not take into consideration commission and other transaction fees, tax considerations, or margin requirements, which are factors that may significantly affect the economic consequences of strategies displayed. Please contact a tax advisor for the tax implications involved in these strategies. Stock and option symbols, and price and volume data shown are for illustrative purposes only. This presentation does not consider your particular investment objectives or financial situation, and does not make personalized recommendations. The investment strategies illustrated may not be suitable for you. Any opinions expressed herein are subject to change without notice. Short selling is an advanced trading strategy involving potentially unlimited risks, and must be done in a margin account. Margin trading increases your level of market risk. For more information please refer to your account agreement and the Margin Risk Disclosure Statement. Schwab does not recommend the use of technical analysis as a sole means of investment research. If you are not completely satisfied for any reason, at your request Charles Schwab & Co., Inc. ( Schwab ) or Charles Schwab Bank ( Schwab Bank ), as applicable, will refund any eligible fee related to your concern within the required timeframes. Schwab reserves the right to change or terminate the guarantee at any time. Go to schwab.com/satisfaction to learn what s included and how it works Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 3

Today we ll discuss A top-down approach Assessing the market Stock screening Candidate

6 Having a plan is essential to success A structured approach to trading helps you: Filter out market noise Focus on your individual strategy and goals Stay within your risk tolerance Preserve trading capital 2018 Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 6

8 A top-down approach Step 1 Step 2 Step 3 Step 4 Step 5 Assess the Dow, NASDAQ and S&P 500 Assess sectors and industries Search for opportunities Review fundamental and 3 rd party analysis Consult the technicals 2018 Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 8

Step 1 Assess the Dow, NASDAQ and S&P 500 For illustrative purposes only.

MA acts as resistance in downtrends Moving averages are generally used to measure momentum and define

11 Step 1 Simplify with moving averages (MA) A moving average (MA) is a trendfollowing indicator that shows the average value of a security s price over a set period. MA acts as resistance in downtrends Moving averages are generally used to measure momentum and define areas of possible support and resistance. MA acts as support in uptrends 2018 Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 11

Step 1 Consider your time horizon Long-term Position trader Short-term Swing trader Intraday

13 Step 2 Assess sectors and industries Top performing sector vs. S&P 500 Global Industry Classification Standard (GICS) sectors For illustrative purposes only Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 13

15 Step 3 Set up a stock screen Generate a list of prime trading candidates using a set of basic, fundamental, and/or technical criteria. Basic criteria Price level Fundamental criteria Performance Revenue Earnings Profit margin Dividends Debt-to-equity Industry or sector Exchange Market capitalization Valuation Price-to-earnings Price-to-sales Price-to-book Analyst ratings 2018 Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 15

Step 3 Technical criteria A moving average (MA) is a trendfollowing indicator that shows the average value of a security s price over a set period.

16 Step 3 Technical criteria A moving average (MA) is a trendfollowing indicator that shows the average value of a security s price over a set period. MA acts as resistance in downtrends Moving averages are generally used to measure momentum and define areas of possible support and resistance. MA acts as support in uptrends 20-day Simple Moving Average (SMA) 2018 Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 16

17 Step 3 Consider common bullish characteristics Price > short-term high (1-day, 5-day or 21-day) Price > long-term high (63-day, 200-day or 52-week) Stocks making new price highs Price > short-term moving average (5-day, 10-day or 21-day) Price > long-term moving average (63-day, 200-day or 52-week) Stocks in uptrends Short-term moving average > long-term moving average Volume > fixed share amount (200K, 500K or 1 million) Volume > average daily volume (5-day, 1-month or 6-month) Stocks with adequate volume 2018 Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 17

Step 3 Tips for screening Price Last trade Previous close Above SMA Ratings Schwab Equity Rating 3 rd Party Analyst Ratings Technicals Moving averages MA

18 Step 3 Tips for screening Price Last trade Previous close Above SMA Ratings Schwab Equity Rating 3 rd Party Analyst Ratings Technicals Moving averages MA crossovers Indicators Volume Minimum volume Above average For illustrative purposes only Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 18

purposes only. 2018 Charles Schwab & Co.

Step 4 Consider Schwab and third-party research Schwab Reports For illustrative

22 Step 5 Consult the technicals Potential entry: New high An uptrend is a period in which prices are making higher highs and higher lows. Buy Buy Sell BUY signal: Breakout above previous highs or resistance areas Buy It signals that the bulls are in control of price activity, and that the price is likely to continue higher. Trade strategy: Buy strength following a new high 2018 Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 22

23 Step 5 Consult the technicals Potential entry: Pullback In an uptrend, connect the low points to draw a support line. Buy Sell BUY signal: Pullback approaching, but not falling through the support line, and bouncing back upward. Buy The testing of the support level suggests buying pressure is sufficient to maintain the support, and that the uptrend is likely to continue. Support Trade strategy: Buy strength following an uptrend pullback 2018 Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 23

StreetSmart Edge Streamline your trading with the right tools 2018

25 Let s review what we ve learned Begin a top-down approach with broad market assessment and filter down to individual securities Compare sector and industry performance to identify out- and underperformers User screeners to efficiently narrow thousands of stocks to a manageable list of candidates Review fundamental and third-party research Identify potential entry opportunities using charting and technical tools Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 25

26 Relevant tools and information Schwab.com: markets & key fundamentals MarketEdge & Recognia in StreetSmart Edge Charting the Markets webcast Schwab.com Learning Center & Live Online webcasts 2018 Charles Schwab & Co., Inc. ( Schwab ). All rights reserved. Member SIPC. 26

Call or visit 1.800.435.4000 schwab.com for more information.

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