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25 Cards in this Set
- Front
- Back
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In relation to market breadth
For 4% breakouts & breakdowns What are the key numbers that indicate varying levels of buying/selling pressure? What are the ratios that reflect a bullish thrust vs bearish trust? What are the signs of a reversal when looking at this? |
0-300 4% normal
300-500 4% increased buying or selling pressure 500-750 4% high buying or selling pressure 750+ 4% extreme buying or selling pressure on reversal 3-6 days high, next day extreme can be potential turn breakouts/breakdowns--Ratio 2 is bullish thrust .5 is bearish .5 days after sustained bull move can be red flag |
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What are the 3 Traits of a breakout?
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1. History of breaking out. Large cap stocks may not breakout strongly.
2. Resistance level is broken. More substantial the resistance, the more significant the breakout 3. High relative volume |
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Setup:Flat Top Breakout
What are the 3 traits of a flat top breakout? |
1. Multiple taps of highs that have failed. The more times tested, the stronger the breakout.
2. Volume pattern should be accumulation 3. Alignment on multiple time frames (daily and intraday). Beware of hidden resistance |
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Setup:Base breakout
What are the 5 traits of a base breakout? |
1. A stock has been in a neutral range for an extended amount of time (intraday or daily)
2. Volume diminishes completely as buyers and sellers have struggled for control of the stock. Balance between supply/demand. 3. Volatility diminishes as the range contracts. 4. Stock should be bought immediately on break of base. 5. When breakout occurs the stock can often double in a week. It is very powerful. |
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Setup: Flag breakout
What are the 3 traits of a flag breakout? |
1. Volume on pullback should be lower than the run-up.
2. Orderly pullback, peaks of candles form a clean descending trend line. 3. Depth of retracement. If pullback erases most of the pole, it is more likely a reversal than a flag. **buy on break of descending trend line or break of top of flag pole** |
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Setup: Pullback to Moving Average
What are the 2 traits of a pullback to moving average? |
1. An orderly pullback to moving average, no emotional or crazy selling
2. Lower volume on the pullback than the ramp up. |
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Setup: Pullback to Price Support
What are the 3 traits of a pullback to price support? What are the two ways to trade this? |
1. Partial retracement to price level
2. Lower volume than upward movement 3. Potentially oversold stochastics 1. Buy close to support level with stop under support. 2. Red to green, stock opens lower and goes green, or breaks resistance. |
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Setup: Breakout/Pullback play
What are the 5 traits of a breakout/pullback play? |
1. Pullback to breakout point
2. Lower volume on pullback 3. Commonly seen in stocks with higher float 500 million or more and more than 1 million daily volume 4. Orderly pullback 5. Additional support at breakout level such as moving average increases odds. |
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Setup: 20 DMA Bounce
What are the 6 traits of a 20 DMA bounce? |
1. Stock surges up for several days and pulls back to 20 DMA
2. Strong volume on upward. Diminished volume on pullback. 3. Bounce off 20 DMA which must have a positive slope. 4. Stock must have history of respecting 20 DMA 5. Bounces off rather than ride 20 DMA for two or mode days. 6. Buy on moving average with stop underneath or wait for sign of strength and buy. |
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Setup: Oversold Pullback
What are the 2 traits of an oversold pullback |
1. Stochastics below 20
2. Must be combined with other pullback plays to increase odds |
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Setup: Double bottom
What are the traits of a double bottom? |
1. Stock sets a new low and finds support, on high relative volume. Then moves up, hits resistance then goes back to the support. Two lows form double bottom.
2. Confirmed after stock breaks the resistance level and holds above. |
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Setup: Symmetrical Triangle
What are the 2 traits of a symmetrical triangle |
1. Triangle formed by a narrowing price range
2. Stock consolidates and tends to move in the direction of the existing trend. Buy on break of triangle |
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Setup: Head and Shoulders
What are the 4 traits of head and shoulders? |
1. Stock makes new high, pulls back, then moves higher, pulls back, then on its next move fails to reach the height of the head and stops a level of first high.
2. Failure to achieve higher highs and higher lows. 3. Ideally high volume on left shoulder and diminishing volume on head and right shoulder. 4. Entry is when price dips below neck line |
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Setup: PR Breakout
What are 5 characteristics of PR breakouts? |
1. Positive unexpected news: new product, parnership etc.
2. Premarket volume 3. Gap up (scan for this 3% pre-market gap) 4. Intraday setup 5. Often base intraday and breakout after 1pm |
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Setup: Earnings Breakout
What are 7 characteristics of Earnings breakouts? |
1. Gap up (scan 3% pre-market)
2. Pre-market volume 3. Check daily for key levels of resistance 4. Pullback to bottom of breakout bar with a stop under can be bought 5. Often base intraday and breakout after 1PM 6. Buy on break of morning highs or buy within a consolidation with stop under support. 7. Stocks with float above 500 million tend to retrace, Below 100 million much lest likely to retest. IPO within last two years adds potential addtional momentum. |
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Setup: Earnings/PR Breakdown
What are 3 characteristics of Earnings/PR breakdowns? |
1. Lower earnings or bad news
2. Gap down pre-market 3. Trade on break of a base consolidation with stop above. Or sell near resistance level it cannot break and set stop above |
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Setup: Red to Green Move
What are 4 characteristics of Red to Green moves? |
1. Opens lower than previous days close
2. Moves above previous close 3. Must be momentum stock with strong move previous day and closed near highs 4. Sell all or half on spikes |
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Setup: Rubber Band Snapback
What are 3 characteristics of Rubber band snapbacks? |
1. Huge run up or run down over several days
2. Daily candle opens fully outside Bollinger band 3. Enter on red to green or break of significant resistance level. |
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Setup: Bottom Bounces
What are two characteristics of Bottom Bounces? |
1. Momentum stock that was trending lower, preferably 52 week lows on daily and forms base, bouncing between support and resistance. 50-60% drop.
2. Stock breaks price range OR breaks over 20 DMA, usually a longer base |
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Setup: Bear Flag
What are 5 characteristics of a Bear Flag? |
1. High volume flag pole
2. Low volume orderly retracement 3. Short at penetration of lower trend line. 4. Ideally high volume on breakdown 5. Breakdown pullback to resistance or bear pennant |
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What are the the 3 indicators we use on intraday charts?
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VWAP
20 EMA 9 EMA |
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Setup: Opening Range Breakout
What are 5 characteristics of an Opening Range breakout? |
1. Momentum stock gaps up on the open
2. Forms a range, consolidating at start of trading session with its 5 minute candles 3. Buy on break of the consolidation range 4. Best entries are within the first 30 minutes of trading, after at least two 5 minute candles 5. Wait for 9 EMA to catch up!!!! |
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Setup: Intraday Base Breakout
What are 4 characteristics of an Intraday Base breakout? |
1. Horizontal base, ascending triangle base, triangle base or wedge base
2. First entry near breakout point as 9ema catches up 3. Second entry at breakout 4. Stop below moving average or bottom of basing range for a looser stop 5. Consolidation on low volume and high volume on thrust ** Another potential entry on failed breakout near breakout point if initial breakout fails and it is reversing and trying again to breakout ** |
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Describe VWAP & MA entry Intraday
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After a move up early in the day
Price pulls back to VWAP or MA Bounces and confirmation when price breaks next MA or VWAP Much less effective after multiple previous intraday breaks, needs time to rest Works on breakdown of VWAP and confirmation with break of MA for a short as well. MA curls down on top of it. |
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Intraday Quick Pullback
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1. Strong upward movement in the morning on high volume
2. PR, Earnings or daily breakout 3. Low vol pullback to 9ema or 20ema 4. Buy on pullback with stop below ema |
