As the market and all the confusion has taken a lot of stocks down with it… there are a lot of potential buys setting up.
All stocks go through up and down cycles. While stocks can go to zero, most of them do not. The key is to know which down-trending stocks are worth buying and which are not.
Luckily I have developed a few setups that have consistently worked for me over the years and I am going to share one of my favorite patterns that can help you see if a stock may bounce…
… so you don’t have to make it a guessing or hoping game… and you’ll know when to buy the dip.
It’s all about the Patterns
When watching stocks make new lows over and over… we all get that itch to pick the bottom. If it used to be $50, it must be a deal at $25. Trying to pick the bottom randomly just makes you a fool…
As you watch it trail off to $15… okay, now it can’t go any lower, right?
A stock can go to zero… A $50 that is now at $15 can go to $10 or $5 or anywhere for that matter…
It’s not wise to just pick a stock based on the fact that’s it down a lot.
There are much better ways to tell if a stock may bounce and when…
What I have developed is a system where I combine a pattern formation with a few simple moving averages to tilt the winning percentage in my favor.
Trust me, it’s all very simple and with my platinum services you can be on your way to success.
Below is the watchlist I sent Friday on Sept. 6.
I will be watching these closely over the next days and weeks as long as the setup is still in the right place. Not every setup turns into a Buy, which is why I keep a watchlist and alert members to actual trade triggers as well.
As you can see, I also provide a video of the stocks on the watchlist to help you understand the setups. I share my insights on what to watch for and what I am looking for so you won’t be lost with just a symbol list and no background.
Today, I’m going to show you a recent setup (the rounded bottom breakout — what I call my RBB setup).
It’s actually one of my favorite patterns to trade because there is a simple process to follow — allowing me to pinpoint the perfect entry and exit points.
Rounded Bottom Breakout (RBB)
One of my go-to patterns for stocks that have been in a downtrend is my RBB setup. As noted earlier, I have developed a system where I combine a chart pattern with a few simple moving averages to tilt the odds in my favor and make it easy for anyone to learn or just follow along.
You will see the daily chart for PBYI below… this stock is on the watchlist from last Friday… so I will be keeping a close eye on it.
If you look at the chart… You will see it has been in a downtrend. Can’t have a bounce if you don’t have a stock trending down…
The next thing I want to see is the stock bottoming or leveling out. And there are many different bottom formations and signals you can use… all of which I will teach you in my forums and trading rooms etc.
Now once the stock is showing a bottom formation, I will be watching my moving averages.
The first oval on the chart points to the 8 EMA crossing the 20 SMA… As you can see price comes back to the 20 SMA but finds support there. And moves up…
Now the second oval on the chart shows the most recent trading days and this is where I am watching for an actual Buy Signal…
I will show you a closer view in the next chart…
So you can see what is happening I blew up the most recent trading days in the chart below… and here is what I am looking at…
In the previous chart, we saw the stock leveling out… and then we saw the 8 EMA cross the 20 SMA…
Well, now we are seeing the 8 EMA cross above the 50 SMA as well. You will also notice the price has tested and held the 20 SMA 4 days in a row now…
What I am looking for now is the 20 SMA to cross the 50 SMA as well. I want all of the faster moving average lined up above the slower… confirming the current short term direction on the stock.
So what am I actually looking at right now?
I am looking at a stock that is in a great position to break out of a bottom… but hasn’t quite given me all the needed criteria to put the odds in my favor.
So there you have it, the basics of a setup that can be very useful in the current market environment… and one that I really love and has worked great for me throughout my trading career…
My trading services offer this system and more as well as real-time trade alerts, watchlists, coaching, like trading room and more… If you want even more valuable insights into my trading systems and strategies… you can watch a video I made just for you…
With over a decade of experience trading stocks, I have learned a thing or two. And I have put all of those lessons into my trading system.
I have multiple setups and checklists that will help any trader easily identify and stick to the plan.
I provide these with my platinum membership… plus daily watchlists and mentorship, as well as trade alerts every day, and much more…
If you want to be a successful trader, join me and get a jumpstart on your success.
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