Technical Symmetry & Trade Entry Strategies | Active Trading Strategies

well the markets have passed some important milestones today february or january february highs or beginning of february highs maybe the last important moving average we'll see if it holds and we're going to talk about some symmetry stick around [Applause] [Music] good afternoon and welcome to active uh trading strategies my name is pat mali and i am joined in the chat i think i'm joined in the chat by barb maybe in a minute um but welcome everybody this is uh of course tuesday and we're closing in on the last two trading days of the year uh today tomorrow and or not of the year of the quarter today tomorrow and then thursday then we roll in to uh the end of the quarter the beginning of the third quarter or second quarter of the year boy i've got my numbers all messed up today but the interesting things have uh started to develop we'll see uh only time is going to tell us what's going to happen there uh today we're going to talk like i was saying earlier a little bit about strategies but based off of technical symmetry before we jump into any of that of course let's get out there and talk about the important information we're doing this this content is for informational purposes only not investment advice or recommendations options are not suitable for all investors there are risks inherent to options trading short options can be assigned at any time up till expiration regardless of the in the money amount and then the money option has a higher risk of being assigned early paper money virtual trading application will not assign short option positions earlier which is very different from a real training account now uh we will discuss technical analysis but there are other forms of analysis including fundamental analysis that can assert very different views all investing involves a risk of loss we please remember that any trailing stop or stop loss order will not guarantee execution at the activation price past performance of any security does not guarantee future returns that means that your your investment decisions you making your self-directed account solely your responsibility now the agenda uh for today is going to be similar to what we do all the time here but we always have something to look at then when we talk about that quick market review what uh do we see today is it a a uh the the uh forbearer of change or are we just at uh still around that inflection zone and will the market what will the market be telling us by the end of this week and then we're going to define some technical concept concepts those technical concepts are going to revolve around symmetry in the markets and of course that's going to mean where do we find uh structure where do we find support where do we find resistance where do we find areas that you can look for to maybe uh make make trades maybe for entries for exits those types of things so let's jump out there and get rolling of course we're going to start with the uh with the markets as a whole we'll take a quick look at the sectors as well the russell 2000 leading the way haven't heard that in a while right uh up to 2.17 almost 2.2 percent the nasdaq composite the total nasdaq a few thousand stocks they're up one and a half percent the nasdaq 100 up 1.3 almost uh followed by the new york stock exchange and the uh s p 500 up eight tenths nine tenths of a percent and then uh dragging along in last place today up a half a percent is the dow jones industrials with that let's pop up here to market watch and take a look in a few things we want to consider uh when we're looking at this is and i'm going to widen this side out this side panel out over here uh we're coming up to the end of the quarter and the end of the quarter becomes important uh in in the aspect of of the markets as to which ones are the have been the strongest over the last three months the last quarter and the new york stock exchange is coming in first place followed by the dow and then you see the rest uh you know trying to trying to make new highs interesting that the dow is in second place it's good to see the new york stock exchange where it is now let me collapse this because we're looking at the sectors here and if we look at three month returns on the sectors going into uh into thursday into friday we've got uh the three month return right here that's going to mean surprise surprise energy still in first place uh a whopping uh return of 35 and uh so that's uh fairly strong uh followed by utilities why is this important uh because when we look at uh strength over the last three months as far as momentum goes energy still has has that momentum it doesn't mean it's not changing right now very possibly could be but those are the things we want to watch for that's why we're going to talk about symmetry today symmetry in in structure and then look to make some sample trade so right now today on a three-year basis uh interestingly with the beating they've been taking financial recently financials strong consumer staples still strong and down the list the last and the last place in is communication services we know they've had a struggle followed by information tech now just because it's into the quarter doesn't mean that those ones in last place have to move to the upside but anything can happen discretionary has been strong recently if we look at uh today's change then we're going to see that in top splits is real estate discretionary communication services and technology so on just an intraday basis that's the strength on uh as we look at the last five days meaning three days from last week two days from this week we have discretionary information technology and communication services so they are making some noise out there so let's get back to the charts take a look at the s p 500 barb is in the room fashionably barb has been on vacation fairly long well deserved vacation so everybody welcome bart back if you haven't already uh you can follow barb on twitter at b armstrong underscore tda you can follow me on twitter at pmalali underscore tda we're gonna we're gonna look at this chart and before we go into the symmetry i'm gonna go to twitter we're gonna look at a chart i've placed out there on twitter i want to also say welcome to everybody that's in the all our friends that are in the chat panel if you are watching this on the archives you won't be able to see the chats uh but you're welcome to join us live anytime you wish so what we have here is an uh a picture of the s p 500 uh we have price action that's the top pane in candlestick form we have a 100 day moving average now when we started this i said we may have just seen price past the past the last uh important uh important moving average and that is the 100-day moving average now for some people they may be looking at a much longer moving average out there but right now on a daily chart daily action that's been an important area that has found uh support before and resistance we've also as of this morning punctured or pushed through the beginning of february uh highs in here and so we are making a new high when we consider the downtrend let me grab a drawing uh a downtrend line we've obviously pinned that penetrated that downtrend but now we have made a new high on a very strong push to the upside so we talked about this the other day a possible change in the character the structure uh the structure meaning that we have long range days that were uh considerably different than what we saw in the past so let's zoom in on this talk about uh some of the uh some of the past price action and uh i'm going to split that screen for emphasis purposes so what we're going to look at here if you if you look right here in the side here we're going to look at this downward push when we see that downward push it's it's and this is where symmetry comes in in this case symmetry comes in because we have these long range pushes to the downside long range candle sticks to the downside until we get to this february 24th low which uh seems to be kind of the reversal day uh across the board when i say reversal date that means a in the short term it doesn't mean that we're off to some kind of bullish race uh to phenomenal heights or anything but in this sequence that we're seeing here uh pushes to the downside and then the gap down that morning we saw extreme negative breath that morning and then rallied back up a a huge strong rally into the end of the day and then followed through but then of course it rechecked back down into here so why do we talk about symmetry here because mirror image kind of action would be this action to the downside and then if we look at if we look at what's happened over the last two weeks change in character strong range pushes to the upside so when we talk about the symmetry here what we're talking about is this area right here similar to this area over in here so kind of that you know rorschach chart that mirror image uh there and the importance of course is pushing back above uh in the intraday right now pushing back above uh the february highs there's still overhead resistance overhead supply where selling came in and that's going to come into the zone over in here which we're about halfway through we're up to about the midpoint of this choppiness back and forth and then ultimately that last this last swing high over in here needs to uh be penetrated whoops be penetrated with some force so uh when we look at the the where price is right now whoops that's not an aero pen where price is right now we're going to look at price in the middle of this sideways action over here again symmetry to the downside symmetry to the upside and then failure right failure not much of a change here so not and it's just that's how down trends begin right well up trends begin not that this is a uh not that i'm making some kind of statement that we're uh seeing a long-term uptrend but uptrends begin the way downtrends begin a push to the downside and then rally back up in a failure while uptrends a push to the upside sell down and then a rally back now where this cell where the sell-off happens that could happen up here in any place the other thing that we're seeing is strong breadth again today eight tenths of a percent uh to the upside on 73 of the trades happening on the new york stock exchange or on the uptick uh so that is fairly bullish and something we haven't seen for a while is uh really the little maybe at least intraday more bullishness on the mcclellan oscillator we saw similarities to this back here at the when we topped out but it couldn't hold through so again with the mcclellan we'll watch this fairly closely and look for the uh midpoint to hold in there all right for those that might be new to options barb has just posted uh the link to get in there on the playlist uh as well so uh please uh if you are brand new to options it would behoove you to get in there and uh learn from the beginning and move forward from there let's look at the nasdaq ndx the nasdaq itself running into uh some price resistance the 100 day moving average but similar similarities here on the nasdaq and quickly the russell 2000 breaking back above this long-term resistance when i say long-term resistance we have to put this on a two-year chart to see what i mean tweeted out about this uh yesterday we can see here that or was it this morning price pushing back up into the resistance zone so here our old support old support becomes [Music] resistance uh that's just uh how uh it works out with a technical analysis sometimes uh and but today pushing above that above that old resistance what else is happening it's just coming into this downtrending 100 period moving average the 200 period moving average is still sitting up here so there's a lot of work as far as the moving averages go for the russell 2000 to overcome some of the negativity in price action but we will see how that how that transpires now with that i'm going to pop out to twitter and in twitter you can find us again you can find me at pima lolly underscore tda but i posted some things out there this morning nvidia apple uh overnight a strong overnight price action in those two discussions on the futures market futures are not for everybody we're just using this as price if you click on any of these charts you will be able to see them in a much larger uh larger picture uh the futures uh since the open we've kind of maintained uh sideways action that's one thing but what we're really going to talk about today is what i posted here and this is the symmetry this happens to be roku we're going to look at this on the on the chart uh on the on the chart on the actual platform here but here i talked about the width of the channel so this is some of the things the learning uh tools that we use is going to be used for twitter to help us understand how price action this is this is so textbook it's crazy uh how it rallied up and then on the way down met each of the uh support areas uh on on the uh that it was established on the way up now possibly creating some kind of maybe an accumulation structure down here but these things these are the things you can find on twitter if you follow me and and barb let's get out there back out there to the charts and move forward take a look at roku and talk about symmetry how did we do this what are we looking at why is this important because if you're looking at if you're looking at how price has made its way to the upside you've heard me talk about this before as it moves to the upside and uptrends are established those uptrends are up down and sideways oftentimes making their way through distribution areas or excuse me accumulation areas well these accumulation areas these pink boxes over here can turn into a distribution areas on the way down meaning people were uh investors were buying on the way up using these areas to sell on the way down again this is the most perfect uh it's probably one of the most perfect charts i've seen of this in a long long time uh but the other thing we want to look at is this topping pattern in here do we see changes in the topping pattern that are going to give us some heads up on whether or not this this zone in here i'm going to draw a box around here is distributive in nature or if it is accumulative in nature now these boxes over here these are all accumulation uh because why because it kept going higher so we were going to make the assessment that there was accumulation rally reaccumulation rally reaccumulation and so on and so forth until it didn't anymore but here was kind of the hint uh in this in this structure on the way down was that it was pretty relentless and a long-term push to the downside a really weak failure uh to the upside which happened to be about you know the rest of the market in october was really rallying strong and roku just could not keep up with that and rolled over now the uh interesting thing here is you see this dashed line that was about a 194 dollar 194 dollar width that's what that dash line is in there and uh that's what this dash line is that's 194 dollars so we think about price action where things where we can identify areas where there might be some support on the way down first we'll look to the uh first we'll look to the right side i mean the left side over here and look for the old consolidation patterns and expect for price to get to that area where do we expect price to drop from a technical aspect a technical measured move and again this is a almost perfect to the penny uh so i'm going to come over here and grab this trend line right here and uh with this trend line what you do is you just draw from on a technical aspect draw from the top of the channel to the bottom of the channel you can see it says about 194 dollars and then i'm going to right click on that duplicate that grab it and you can see this is the reason this line expands is we're looking at you notice how it gets longer as we go down that's because we're looking at a logarithmic chart a logarithmic chart meaning we're taking into account percentage gain as well as just as well as price gain and when you do that when you're looking at longer especially longer term you're going to get a more correct trend and you'll notice almost to the penny as a matter of fact this this low over here if we took if we took here 190 190 694 and subtracted or excuse me 294 and subtracted 194 well you'd end up with uh right around a hundred dollars and that's where uh it presently has bottomed out so that's kind of the measured move the symmetry uh that we uh that we look at on a on a chart right now that's great pat that was hindsight so we're gonna what we would do with roku as we'll do with some other stocks in here is we'll watch to see are we getting any climactic action down in here so we have a strong gap down big volume and then this sideways action in here now it could be done and it could pop to the upside and find its way back down and take off again or it could go through maybe a longer process of accumulation if this is accumulation when we say accumulation what has to occur let me ask everybody this question for this pattern right here on roku to be accumulation what has to occur well from a textbook we need two tops and two bottoms right preferably we'd rather see something like this and then a uh a move to the upside but we could have the double bottom kind of a pattern in here and then a push back uh to the upside remember on a double bottom the apex of the w cannot be above the the top left side of the of the w so i can't this this is this is not a double bottom if it pushes up there and does this this that is something else there's going to be something else all together so w has to have a lower apex in there let me check the chats in here all right so well you can continue to watch roku or we can find things out there that may have been uh that may have already found some kind of a bottom gone through some kind of a bottoming process so let's pop over here to dxcm now again we put this on a two-year chart you're not going to see anything quite as textbook uh in in structure as what we see with the roku but what we want to do here is look at this downward push look at the the symmetry that we see as this starts to build in this bottom so a give up of price give up a price here on on increasing volume we see a rally actually a couple of rallies in here rally a pullback a uh an attempt attempted a breakout an overshoot if you will of the previous high right here and right here and then pulling back here's that that reversal uh pattern that reversal candlestick the 24th of february that we saw on all of the indexes right and this is gonna you're going to see this in a lot of charts and then we see price run back up fall back down and now we have this push to the upside very similar in structure to the sell-off falling down running back and making a bare flag falling down running up bullish flag running up bullish flag and away we go so but the when we when we think about areas to buy do you do does somebody want to come in here where we have had where we've seen selling happen before that's going to be these areas over in here that's this dashed line so we've seen a certain amount of selling over in here people have a tendency to sell where they've sold before volume totally dried up there and then picked back up as it started to sell off so again in this area right in here selling began selling began to start began to pick up we would somebody might expect to see that occur here on dexcom that doesn't mean that the party's over but it could just mean that patients patients patience is key patience is part of the process sometimes it's in your sitting that's more important than in your doing okay so sometimes with things like dexcom you need to perhaps sit back and wait for uh possibly a better entry which would mean with dexcom perhaps some kind of a pullback uh to a support level or or some some semblance of that before it takes off once again all right so dexcom when we when we consider what's uh occurring volume is starting to slow as it moves into resistance we're seeing though outperformance on a relative basis and then here's something that dexcom hasn't seen for a while and that is today the rsi sitting up at around 68. now that in and of itself no big deal what you might look for is a rally and then a pullback and seeing dexcom pull back or the rsi and dexcom pull back and then break out so one of the things momentum traders will look for is a break above this line as rsi breaks higher other people may look for a pullback another flag along the line of the uptrend so note for some no trade to be had here it's up to you what you want to do you can always go in and put a small tiny position on just to keep yourself informed if you will as to what's happening on the uh on the chart there's a there's a observation from jack use the channel with uh to determine how many points to move above the current price that will give you your measured move a possible short term target price so if we do that with dexcom and add that in and you know we our discussion on uh symmetry the way the way you would might consider doing this is you look for that first relief back to the upside and that's where you're going to start drawing the bottom of the channel and the top of the channel and then you look for the fake out the shakeout the test of the bottom of that channel and uh and see how see what happens there so now we have a fairly well defined channel with with a lot of the earmarks of of bullishness meaning we have demand coming in on the shakeouts to the downside demand coming in as a retest and then if we look for uh the the price target what we're going to do is we're going to take this channel run this to the downside or you can just use a calculator and we'll make it perfectly 90 and right click duplicate pull that up and come on move there we go i'm trying to get it in there perfectly so we've exceeded the width of this channel so for short-term targets we've hit that short-term target but there may be a little bit more upside again nothing is set in stone this could keep going for whatever reason right but we know from a measurement that we've met the required movement to possibly see some waning movement to the upside let's move on to another and this is crowdstrike this is another one where when we look at symmetry well we look at what happened um didn't want to grab that we look at what happened to the left side and see if we can see anything on the right side that's fairly similar now this could still break down and head lower but are we seeing some possible changes so this this whole topping process that it went through right in here let's let's kind of measure this out let's take a look at this and see what see what occurred in here as price broke out and rallied pulled back it had this fairly strong push to the upside on large volume so that's going to be really more of a climactic volume run okay so this is where we're going to draw a line in or a a channel in here along these highs down here and you can see this the distributive structure that started to build up as price failed to move into new highs started losing strength relative to the s p 500 and as it started to sell off volume started to pick up to the upside so what do we look for next we look for climactic action to the downside and uh so let's move this don't want to clear the drawing set let's move that pink box out of there when we talk about climactic selling well we're going to look for pushes to the downside and strong volume just so happens there's really you can often times count the pushes so one push to push some mo very many times you're going to see three three pushes to the downside before you see a a stalling or a consolidation so what do we see here well we saw this fall we we start drawing our uh drawing our our consolidation area in here we saw the uh thrust to the upside fail and then we saw this break back down and then start to break out uh to the upside again wasn't much of a check back we look for check backs like right in here to to use this as a spring board a bounce off of that old old resistance now support to see if to put a trade on and see what happens now we're drifting sideways as as volume really starts to drift lower we have strong relative strength uh as well and somebody might look to put a trade on above today's high here with crowd somebody might wait for price to pull back to what they might consider a lower risk trade maybe back to the 20 period exponential moving average whatever you want to do it's is up to you but there's many ways to do things a breakout of this flag in a stiff wind if you will that's this zone right in here after a strong run if we measure this this run to the upside from these lows right in here to here that's about a 43 dollar run should this break out above this area in here somebody might expect a 43 dollar run or about a run to about 260 268 or so somewhere up in this zone up in here so let's let's do this let's put a trade on to buy if a crowd breaks out and moves above today's high so what's the day's high it is 220 i have it on today 225 44 so uh we'll we'll look to buy say 20 cents above that 64. 225.64 and exit on a break back below this these this test high over in here which would put us below the 20 period moving average so 2 250 or 203 excuse me is where the 20 days at right now and so 225 54 minus or 64 excuse me for today's example minus 202 let's say it's a 200 225 dollar stock right now something like that 222 stock so we'll go to 202 and that says that we'll have a trade risk of 23.64

if you had a thousand dollars a one percent risk of your total portfolio so one thousand dollars of a hundred or one percent of a hundred thousand dollars is one thousand dollars you're going to take that uh 1 000 and divide it by the 20 23 dollars worth of risk and it says you can buy 43 shares now if you're looking at this and saying well i'd rather buy it maybe at a lower risk on more of a pullback but i want to get in now so don't buy 43 shares buy buy 20 right by 15 and just start to work your way in but you've got to get your full position on at some point so i'm going to right click on the chart buy custom with the stop remember stop losses are not guaranteed uh to uh activate at the execution uh or execute at the activation price we're going to change this uh buy over here instead of 43 let's buy 21 shares we're going to come in and buy 21 shares uh if it reaches a certain level we're going to click this firecracker thing and says we'll sell 21 if it reaches a certain level now this is going to be a buy stop order there's going to be two stop orders involved in this we'll unlock this right here you're going to unlock this so it's going to give you a price to where it is right now but we are going to change this to again to today's 20 cents above today's high so 225 64. and then we're going to change our stop to 202 perhaps and hit enter then what we have to do here is change our our limit order to a buy stop so that says we're going to buy 21 shares on a stop uh at 225.64 above where the market is trading so we're looking for momentum to to show it's to show its hand to the upside here and then we're going to exit out if it drops to 202. we're going to put both these on good till cancel orders versus a day order so they don't so this trade doesn't just if we don't get filled today does not uh go away at the end of the day so we'll hit confirm and send double check everything make sure that pat has the right stock in here crowd 21 shares 225 64 exiting out on a stop order at 202 and we'll send that off and let that do its thing okay so here's nvidia we already have a trade on nvidia one of the reasons i want to again the reason i want to look at this is the uh the symmetry of the price action so we've got downward push upward failure and then the 24th and this pushed to the upside and kind of matched the sell-off to the downside now we're breaking out now though the thing with nvidia is we have these two days three days where we just drifted sideways and now it's trying to break higher some people may decide to wait for some kind of a pullback into support and then and then a run we put this trade on yesterday uh on a break above yesterday's high and it was filled in and luckily it's always there's always a certain amount of luck don't don't kid yourself but so far so good as we uh see this moving to the upside on big volume strong relative strength but here with the rsi as price breaks out above resistance not getting a strong reading on the rsi we'd rather have that above 70 but time will tell what happens there so here is another one we put a trade on this is more along the lines of what i've been talking about a rally a pullback and then maybe we at we've got a full position on this right now so we're not going to add to this but somebody could add to lac lithium on the upside but again the the the w structure all of the the uh the way price uh pattern starts to jump out at you and tell you that hey perhaps this change to the downside is now changed to the upside this selling characteristic is now possibly buying or bullish characteristics on strong volume strong relative strength uh strong momentum could have stronger momentum so this will be watched so let's put on another trade here there's if i've got time there was two i wanted to get on but here's dutch brothers now this is an ipo and when we think about uh putting this together what do we see today we see a strong long-range day to the upside well where is it right now well it is at resistance this ipo back in the fall it's at this just this peak in this peak here not real strong super strong resistance uh we might say for some people would and it's up to you how you want to do this a lot of people use more the closing prices than they do the tails uh that's a discussion that goes on and has been going on for time immemorial with uh technical analysts but this is a pretty long range day very strong volume to the upside relative to the s p 500 strength uh stronger and if we look at the rsi which we're going to take this with a grain of salt because we don't have a full year of information yet so the rsi is it doesn't give us all the quite the information we want but in the near term the momentum is fairly strong so just one caveat with the rsi it's better to have at least a year's worth of information but volume is telling us something but if we look at the the geometric structure of this then we have this pullback higher highs higher lows now today we have another higher high so we have this trend and this trend is starting to steepen starting to steep and where's our next area of uh selling may come in uh over here to the uh whoops i can get a hold of my mouse here uh come in over here right around the 77 area as this pushes to the upside so we're going to do the same thing here we've got 63 get in here around 63.64 get out around the as it drops below these lows over in here so about 10 dollars of risk let's say we get out it at uh 54 so 11 worth of risk and if you have 11 worth of risk and you have a thousand dollars that's going to tell you you can buy 90 shares of stock on this and with this one in in the interest of time uh we're just going to go ahead and not buy 90 shares we're gonna buy a hundred shares with a stop we're gonna keep this at the limit because we're gonna buy this right now we're not gonna buy 90 shares we're going to buy 45 shares and just kind of partial in scale into this trade and exit out below this previous low over here so again right around fifty uh fifty four dollars fifty three dollars excuse me and change our stop to good till cancel remember stop's not guaranteed to uh execute at the activation price make sure i have everything in here right so we're just going to go ahead and buy this one uh and uh send this off now this one has been filled something to consider is we've seen some action today and then i'm going to let you guys go in uh some of the uh electric vehicle area we look at tesla tesla continuing to move to the upside um there is one that is when we think of uh symmetry like a right type correctly uh in in structure and if we look at are we looking at a bottoming process and this is halen and so very quickly i've got to get going here we have this this push strong push to the downside here volume picking up as it as it goes into these lows in here so let's zoom in on this one this is another electrical vehicle uh stock let's pop this in here look at it and start doing our work measure it see what we what price action and volume can tell us so when we look at this big volume possible selling climax in here uh rally up re-test february 24th re-test again volume starting to pick up now volume receding is it's up against resistance so here's one to consider this is one i want you to do some homework with that homework is to watch what happens look at how the volume expands or doesn't expands if this breaks out watch and see what happens on the breakout with the rsi relative strength index is strong i mean relative strength itself is strong relative strength index is strengthening so we'll see what occurs here bottoming process it's been this way for a few months so it's got some time behind it which is good all right symmetry i think we've done uh pretty much what i wanted to do uh today and that is to define that technical concept of of uh of symmetry right so we've seen that in the in the overall markets we're seeing that start to develop to develop in stocks that have been in uptrends drifting sideways have been in short-term downtrends consolidating have been in longer term downtrends like like hailin uh uh high line uh as it starts to drift sideways these are the things you have to learn and you have to work on uh yourself to to make yourself better at least if you want to with that please click on the uh subscribe button right there so you can find all of our great uh trader talks webcasts that we have all of barb's good stuff all of the other uh td ameritrade investing or i've said that like five weeks in a row it trading uh td ameritrade education coaches so with that uh i have to run remember everything we're doing here is for educational purposes only and uh there's a survey please fill out that survey give us your comments we you that use that to help design new uh products new webcasts for you you're responsible for the decisions you make in your self-directed account this is for educational purposes only so long

2022-04-01 06:14

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