I see this pattern almost daily. Usually it doesn't recover this much but enough to profit from. Almost any bad news causes it. Watch INTC in the first hour tommorrow.
Hi El cazador the thing is : praetorian2 trades this pattern on an intraday basis, sometimes overnight - I'am looking for those particular patterns to trade them for a longer timeframe - say 2 - 5 days or more in order to profit from a healthy recovery of the stock. From 7.500 stocks I scan daily for this pattern, I rarely find more than 10 or 15 stocks which really qualify for the pattern. Out of these, maybe 50% or less offer the chances I'am looking for. What I want to see is a burst on volume and price going to the upside after a longer period of price declines and volatility compression in the stock. The volume / price burst signals new interest and probably a change in opinion on the side of investors , which might last longer than a day or 2 - it might also be only a brief short-squeeze. But that's part of the risk I have to take. When you take a look at the daily charts I posted here earlier and how they developped after the signal occured, you know what I mean. It's not just buying after brief selloff because of bad news. This will last only for a few hours in most cases these days. Problem with buying after the selloff is, you really don't know where the bottom will be. Most often, you'll see a staircase to the downside type of chartpattern - like in the NAZ and many techstocks since months.
Since no one is reading this thread, i'll stop posting, but to end the thread, I just was stopped out of both today. But i took about 5/8 avg. profits on each trade. about 10k shares each. And there was 10-30k worth of liquidity every 1/32 just so you know. If anyone wants to continue this, just keep posting, I'll definately respond
Had similar results with USL in Jan. Although this strategy is probably quite dangerous when coupled with very low liquidity, it worked very well in the case of this stock. BTW - the catalyst for the trade was bad earnings news.
I got a pretty good one from dsgx this week, but it isn't as liquid, so I didn't post in real time b/c I don't want to be known as someone who hypes stocks.
Thread members: I am a new member who has just learned something, in addition to much from reading through these threads. Ok, now I understand why I should be careful about posting ticker symbols on this site. It is because in general, mentioning specific stocks could be misconstrued as winning stock picks, or recommendations for making money, by followers who know nothing. Let me clarify my intent with a disclaimer to dispel any lurkers from blindly acting on their own behalf, taking losses, and possibly trying to hold this site, and specifically me, responsible. Previously posted on 03-13-01, I Jeffrey, listed specific ticker symbols to share a setup pattern with simular sell off's(Falling Knife) This is for seasoned traders to take note, understand the concept, and watch until they prove to themselves, on paper, that they either have, or have developed the skills of a successful trader which includes taking resposibility for their own stupid actions. Thanks for listening. I will include a short disclaimer whenever a ticker symbol is posted to this site.