The 56 Point TA; Charts With an Attitude Message Board

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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude

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To: DanZ who wrote (24449)	12/20/1998 2:30:00 PM
From: Doug R	Read Replies (2) of 79282

Hi Dan, I guess I'll field this one for Ivan. A stock gaps down 30% or more. Such a stock is an optimal risk/reward buy AFTER the following occurs: First...wait at least 3 weeks after the gap. Then...track the price looking for the first day that it makes a new post-gap intraday low and closes with the bid at least one tick off the low on greater volume than each of at least the previous 3 days (the "signal"). Set a stop loss 2 ticks below the signal day low. I call it the Post Gap Dead Cat Exhaustion Bottom (PGDCEB). ASHW worked just decently after the signal on 12/8. I was able to sell for a nice % gain on that one but I bought back in on Thursday expecting a double bottom. When it performed another PGDCEB signal instead, it became an opportunity (actually a requirement) to avg. down on it. Looks like there's several of us in the same boat you've been loading up. Doug R

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