Another 2-Hour Chart

Here's yet another example of what you can do with 2-hour charts - Again it is AKS but what I wanted to show you was a simple three-pronged set-up.


What you see here is an RSI(2) < 2 coupled with a tweezer bottom (the black diamond below the third candle informs that formation) coupled with an S1 pivot point.

Note that a purchase on the tweezer bottom candle - say at the cross over on the S1 at 29.88 and this morning it hit 31.60. That would have been an excellent return for a couple of days of swing trading.

RATE - Watch It

Notable Calls is out this morning with an article on RATE and as is my custom I always look at a stock's chart on several time frames whenever I read about it on Notable. So I pulled up RATE and what I saw was yet another illustration of my many points and I wanted to share it with you.


In the previous post I spoke about dull days and two moves and RATE proves th epoint with a move down and a move up. Interesting enough the move up was off a BOB (red circle) that included a tweezer bottom (arrow) - I like these kinds no matter where they appear on the chart but the fact that it was a bounce off the pivot point just adds to the excitement.

Watch for BOB, watch for the tweezer and keep an eye on the pivot points.

Needless to say I was out playing golf when all of this activity was taking place - but, who knows - today is another day.

Read Notable Calls every day - if you don't you are just pretending.

Using BOB as a Day Trade Starter

When I began day trading one of the more difficult problems to solve was finding stocks to trade. I used gap-up and gap-down screens right after market open and these work well but sometimes some of the best trades are neither gap up or gap down.

So I think that that I have solved that problem for good by using the BOB set-up filter to find potential day trades. And had I been at my station Friday instead of beating a white ball around I would have had a beauty – IN.

The BOB set-up filter finds the first two candles of the set-up and then relies on you to find the third candle.

Here is how IN looked on Thursday with the BOB set-up – you can see how the set-up converted to a full BOB on Friday – it opened and went up – i.e. the low of the day Friday was above the low of Thursday. And that is key and critical to a BOB set-up.


The 15-minute chart looked like this so if you didn’t want to take the crossover entry off the BOB set-up you could have taken one of the returns to 4.


Here is how those looked with the pivot points in place. I used the extended pivot points to illustrate this trade.


This chart also has a couple of other interesting features – one is the dummy spot on Thursday coupled with the RSI(2) < 2 and the other, not annotated, is the last three 15-minute candles on Thursday have a BOB, an RSI(2) < 2 and a tweezer bottom all in the same three candle set-up. I never recommend starting a day trade overnight on something like that but it would have lent credence to the next day’s action. And as soon as you saw the crossover you could have taken the trade with confidence.

Another Tweezer

I'm glad that reader brought up tweezer bottoms because on a day like today they are everywhere. If you don't think they are potent I'm up a buck on PAAS already and here is another of my holdings GGB -



At one time or another in my life time I have used or tried probably every piece of technical analysis known. Not only have I tried most of it I have attempted to modify most of it to make it work better.

Now I'm settling in with things like - Return to 4, tweezer bottom and BOB and I'm doing better than ever. Needless to say they are not perfect but they do and should get your attention when you see them.

I still use indicators like RSI(2) < 5 to find stocks to watch but the best plays are sometimes keyed by the simplest methods.

And the candle to the left of the tweezer indicator is purple because the RSI(2) < 5 at that time.

Tweezer Bottom

A reader wanted to know the code for "tweezer bottom" - here is what I use on Quote Tracker

If bar low = bar low[1] and bar close > bar open and bar open < ema(21) set color to $70106D

The color is kind of a purplish black - I use an arrow under the candle to point it out. I like using this one on 4 minute charts but it works well on 15 minute too.

Here is an example - you can see where PAAS put out the tweezer bottom on the 4 minute charts -



You can see the little arrow on the chart.

A bonus indicator is also being shown - the lines are Pivot Points. You can see where PAAS bounced off of support 1 and ran right up to its Pivot.

Tweezer Bottom - The Filter

I’ve talked about the Tweezer Bottom before and what I wanted to do today was to show you a filter based on the tweezer bottom and let you see some of the results from that filter over the past 3 months or so.

Here is the filter in all of its four lines of glory:

show stocks where close is between 15 and 35
and average volume(90) > 500000
and low equals low 1 day ago
and close < Donchian Center Band(20,4)

And here is what it looks like -



The filter back tests are impressive with a 75% win rate and a 100%+ ROI over 4 days but I think results that you can verify are as important so here are some you could look up yourself. The values shown are for the stock from the day it was discovered by the filter to Friday, 27 January 2007 i.e. yesterday.

OCT 20 (65 days ago)
Top 5 selections only of 11 (9 win - 2 lose)
SCHW 11.45%
TEVA 2.58
ADI 11.96
EXPE 26.74
WCI 32.90

Dec 26 (20 days ago)
Top 5 selections only of 12 (10 win - 2 lose)
NSM 2.84%
TOL 2.34
ACOR 8.18
LYO 14.86
SWFT 13.27


JAN 19 (5 days ago)
2 selections only
BMC .32%
CECO 8.03

And these are the most recent selections from the filter for you to put on your watch list for the coming week: NYB, CHT, MFC, TCB, and ORI.

Please, as always, do a thorough DD – I have not checked any of these regarding coming earnings reports or institutional holdings or growth or any other fundamental approach. This is pure TA at its best or worst.

Once again thanks to prophet.net for the charts and stockfetcher.com for the application that allows me to write my own filters.

Three Tweezer Bottom

Last week I showed you that KKD on the 8th had a 4-tweezer bottom on the 2-hour charts (12/07). I mentioned that the tweezer bottom is often used as a significant point - no lower than here (for a close).

Over the next three days KKD again printed a tweezer low on the daily charts - each day closing higher than the tweezer bottom on the 7th.

Then yesterday it gapped up and closed up significantly. Do we know our tweezers or what?



I mentioned that I watched for tweezer bottoms and tops and used them as significant turning points in a stock's price. They are a warning or guidance and you should watch for them also.

Tweezer Bottom

The other day I wrote about a tweezer bottom in GM that was separated by an hour. How about this one in KKD from Thursday? The bottom occurs in each increment of a two hour chart.



The tweezer bottom is telling you that this is it – there is no more down side to this stock – every time it hits here it is going up. That is a good thing to know.

Here is what happened on Friday with KKD.



You can see the four bottoms on Thursday in the 10, 1, 2 and 3 hours. On Friday it set-up nicely at 9.78 and went up from there for a bit. I'd watch this one for awhile longer - it may continue to climb now that it drew the line in the sand.

(This is not a recommendation to buy this stock - nor is it a recommendation to buy Krispy Kreme donuts)