Tuesday, March 18, 2014 11:05:22 AM
Couple recent examples and one that didn't work:
HGG. Retail, was dropping because fundamentals turned and there was some panic that it was going nowhere but down. There was 50% short. RSI double bottomed down under 20. Stock dropped from about 10.5 down to 7.5 from the first to second bottom. Despite that substantial drop, MACD Hist didn't make new low. Stock and RSI and MACD turned and rallied back to that previous low (which seems to be fairly solid target with these)
BIRT. This is one my buddy is in. Didn't have as much short interest as HGG I don't think, but it dropped substantially after earnings disappointment. Buddy talked to IR for BIRT and was told they changed how they reported numbers and that some of this was miscommunication with the new reporting and that people had been selling without understanding completely. I took this to mean that the next earnings numbers will probably be greeted a lot better. And they weere at ROTH conference and one before that making the rounds. Buying seemed to pick up after conferences. Maybe as understanding has been growing.
I posted about this one on 2/25, and this is what that was based on.
"BIRT. Non bio bottom play. A buddy of mine owns this so it's been on my radar lately. Stock down on last earnings report. He feels overreaction. Stock has made new lows but enough divergences in indicators to think could be setting up for a nice bounce.
Zacks piece yesterday saying to sell, yet stock up a little. Think good chance that last Friday was bottom for now."
CNDO. This popped up as possible bottom play on Sheff board last September. I considered buying when it made new low in September but MACD Hist didnt. I didn't know a lot about it and it didn't have the level of selling that we usually look for, RSI hadn't gotten that low. Luckily I didn't as this one gapped down a lot from this area.
After the gap down, it turns out it would have been a nice play. After that gap it made a new low and RSI had risen and MACD Hist had risen and was going positive.
So no perfect system, but usually good to see a large selloff for valid reason often capped off by valid reason such as one last article urging people to sell, or a story on cnbc, or one last downgrade, etc.
Note that this can also apply to extreme tops as well as bottoms.
Food for thought at least...
HGG. Retail, was dropping because fundamentals turned and there was some panic that it was going nowhere but down. There was 50% short. RSI double bottomed down under 20. Stock dropped from about 10.5 down to 7.5 from the first to second bottom. Despite that substantial drop, MACD Hist didn't make new low. Stock and RSI and MACD turned and rallied back to that previous low (which seems to be fairly solid target with these)
BIRT. This is one my buddy is in. Didn't have as much short interest as HGG I don't think, but it dropped substantially after earnings disappointment. Buddy talked to IR for BIRT and was told they changed how they reported numbers and that some of this was miscommunication with the new reporting and that people had been selling without understanding completely. I took this to mean that the next earnings numbers will probably be greeted a lot better. And they weere at ROTH conference and one before that making the rounds. Buying seemed to pick up after conferences. Maybe as understanding has been growing.
I posted about this one on 2/25, and this is what that was based on.
"BIRT. Non bio bottom play. A buddy of mine owns this so it's been on my radar lately. Stock down on last earnings report. He feels overreaction. Stock has made new lows but enough divergences in indicators to think could be setting up for a nice bounce.
Zacks piece yesterday saying to sell, yet stock up a little. Think good chance that last Friday was bottom for now."
CNDO. This popped up as possible bottom play on Sheff board last September. I considered buying when it made new low in September but MACD Hist didnt. I didn't know a lot about it and it didn't have the level of selling that we usually look for, RSI hadn't gotten that low. Luckily I didn't as this one gapped down a lot from this area.
After the gap down, it turns out it would have been a nice play. After that gap it made a new low and RSI had risen and MACD Hist had risen and was going positive.
So no perfect system, but usually good to see a large selloff for valid reason often capped off by valid reason such as one last article urging people to sell, or a story on cnbc, or one last downgrade, etc.
Note that this can also apply to extreme tops as well as bottoms.
Food for thought at least...
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