What Goes Up

Must come down – first a picture using the 2-hour charts of a stock entering earnings.



The point, of course, is that a Blow-Off Top or BOT is the exact opposite of The BOB. And you can see it on a lot of different time frames. And after a BOT what happens?



I’ve mentioned before that I like to use the 2-hour charts to set up trading candidates. The way I do that is by this process – I use Stockfetcher to find a list of 10-day lows tailored to my specifications. This is easy because one of the ready-mades provided by Stockfetcher gives you the basic filter and all you have to do is make some modifications. For example I want a specific price range and a specific average volume and a specific Average True Range. It takes a matter of seconds to mod the ready-made and run it and output a symbol-download to a CSV file in Excel. I dump that list into a prophet.net watch list and then use the two-hour charts to look for, well, BOB, of course, but also dummy spots in the final half-hour of trading and so on. “Final half-hour”? Yes – you see the neat thing about 2-hour charts is that in the trading day there are only three complete 2-hour blocks and the last block is only 30 minutes. I don't know if that is neat or not but that last 30 minutes can give you a world of information about the next day if you are willing to put in the time to study it.

I use the 10-day lows because they are not so beat up that they might even have a day or two of recovery and I am looking for day-trading candidates not a life-long relationship.

Using the 2-hour charts to sort out the list looking for candidates has the added advantage of providing a stronger set-up and that is always beneficial.