Hi John,
Ok...here's the scoop. As a thread, we play a particular kind of cat with a particular kind of chart activity. CELL just happens to be the type of cat we like. Now...the details.
First, to qualify as a 56er card carrying cat the stock MUST first gap down 30% or more (close to open is my own preference). CELL fills that bill. Then, over AT LEAST the next 15 trading days, the stock will establish an intraday low. In CELL's case that low happened to be established on the day of the gap....5 1/2. After the initial 15 day incubation period the next step is for the price to actually fall BELOW the post-gap low (in CELL's case...5 1/2) INTRADAY. This drop MUST be accompanied by volume for the day that is greater than at least EACH of the 3 immediately previous days. The trigger (or signal) is for the bid, AT OR PRIOR TO THE CLOSE, to be HIGHER than the low for that day. You might see the price hit the new low early and bounce from there immediately and remain off the low all day while volume swells. You might see the low late AFTER the volume requirement has already been met. You might see the low and the volume requirements met while the stock just hangs on the low all day or even continues to establish new lows all day. The key is often found in the last minutes of trading. The bid is off the low, the volume requirement is met and there's still time to get in while you're fairly confident that the bid will STAY off the low. THAT'S the hard right edge method. Ivan's preferred method.
There's also some cats that allow entry the day after the signal. Not as many will do that since most of the really good cats eat up much of the technical bounce on the day of the signal.
The litter box is getting messy here, I know, but experience with the technique is crucial.
Now that you've brought CELL aboard as a card carrying cat, just wait and watch for it to hit that high volume, exhaustion bottom at sub 5 1/2. It may take weeks...it may take days. BUT, the only way to nail the sucker is to get it at the proper moment. I'm sure Ivan will post it when it's signaling. He's awfully good at that.
Thanks for the new cat,
Doug R
PS; The official moniker for the process is the Post Gap Dead Cat Exhaustion Bottom (PGDCEB). |
