"How to Manage Risk Through Year-End" Nate Bear, Lead Technical Tactician, Monument Traders Alliance Hey Gang, The Fed's kicking off their big meeting today, and everyone's holding their breath for tomorrow's announcement. It's funny - every time we get close to these Fed meetings, I see traders freeze up like deer in headlights. But you know what? While others are paralyzed by uncertainty, we're going to do what we always do - follow the momentum and profit from clear setups. That's exactly what I've spotted in Roku (ROKU) right now. This stock has been quietly setting up one of the most beautiful patterns I've seen in weeks, and my S.A.M. AI Scanner is flashing multiple signals that tell me something big could be brewing. Before I show you exactly why I'm excited about this setup, let me be clear - I'm not trying to predict what Jerome Powell will say tomorrow. That's a fool's game. Instead, I'm focused on a proven pattern that's worked time and time again, regardless of what's happening with interest rates. My first step is to create a game plan for the week. Market Outlook Tomorrow's interest rate announcement is really the last major data point before the end of the year. Markets priced in one quarter point cut based on the CME FedWatch tool. Futures imply another quarter-point cut again in the springtime. But they aren't sure after that. While I can't speak to macroeconomics all that well, I can tell you that indices like the Nasdaq 100 are in full bull mode, with stocks like Tesla going parabolic. I don't see that changing before next year, even if the Fed takes some of the wind out of the sails. See, as we approach the end of the year, volume begins to evaporate. Traders begin to take vacations because there isn't any data or earnings to process. So, outside of some initial positioning tomorrow, I expect the market will tell us whether it wants to float higher, lower, or just chop sideways. We also see whacky stuff start to happen at year's end. The VIX and S&P 500 can rise or fall together. Stocks come up short or blast through support and resistance levels and other kinds of irregularities become common. That's why it's critical to be selective with your setups and understand there will be fewer trades than usual. But the trades you do find can offer some amazing profit potential. Why I Love This ROKU Setup Take a look at this chart and you'll see why my S.A.M. AI Scanner is lighting up right now. ROKU has been in a beautiful uptrend since August, steadily climbing higher with strong momentum. But what's really got me excited is the recent price action. The stock has formed a perfect symmetrical triangle pattern right at the highs. We've got a series of lower highs and higher lows, creating compression in the price - exactly what we want to see before a big move. And check out those indicators at the bottom of the chart. The squeeze is setting up beautifully, with momentum starting to curl higher even as price consolidates. This is a classic TPS setup that's hitting all three of my criteria, which are labeled on the chart: - Trend: Clear upward trajectory since August
- Pattern: Tight triangle consolidation with converging trend lines
- Squeeze: Our momentum indicators are coiling up for a potential explosive move
The best part is this stock had four different A+ setups on the 10, 15, 60, and 78-minute timeframes in addition to the one forming on the 130-minute chart. With the stock sitting right at $82, a break above $85 could trigger a significant move higher. The measured move target from this pattern suggests we could see ROKU run to $90 or higher. Remember though - we're keeping position sizes manageable heading into the Fed announcement. But this setup is too good to ignore completely. |
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