EZ Breakout

How to find Market TOP?

5 distribution days happened in 3 week period. . Market closes lower on heavier volume than previous day. Market means SP500 and Nasdaq.

How to find Market Bottom?

2 events leads to it.

After market trades down it starts to go up. That low point is considered as market bottom. After market bottom we have to see Follow Trough days on 4th day or later. But before 10th day.

Event 1:

Day 1 of the 'day count' is the first day that either: market touches its lowest point and closes upper half of its range.  OR the 1st 'up' day after market touches its lowest point and closes lower half of its range.

Event 2:

Once day 1 occurs and the low is in place we are looking something called as "Follow-Through" day

Follow-Through day 

When 1 of the indexes (DJIA, COMP or SP500) closes up 1.25%+ on higher volume than previous day

It happens somewhere on day 4 or later (It does not count if it happens on day 2 or 3 )

The most powerful Follow Through can happen after day 10 but they are rare and usually not as powerful.

This methodology signals the market bottom about 80% of the time and the market has never bottomed without a Follow Through day.

Follow-Through days that have staying power tend to have a lot of stocks ready to lead the charge and ready to  breakout. This was not the case initially, but now many more stocks are setting up and breaking out.

If one of the indexes suffers a distribution day (a decline in higher volume) soon after the follow through, its often a sign that  the follow through will fail.

Follow through days tend to fail more often after the indexes have fallen sharply over a short period of time  while slicing their 50 day and /or 200 day moving averages (like in Feb 2020)

A close below the low of the follow through day also signals likely failure.

Market Top

When is market  bottom will happened?? nobody knows that. After market goes down 20 or 30 or 40% 

How to fix a stock if price goes down from buy point. 

for example after earnings or some bad news.

Buy one ITM call and sell 2 OTM call.

Ex. Bought AAPL at 133  now it is 123.99 how to fix it?

Buy 1  120 call at 9.95 and 

sell 2 130 call at 5.25 (9.95 - 10.50) we used sell premium to buy a call.

so now avg price of AAPL is 126.5

Swing trade.

1. 6% protective stop from buy price.
2. if Daily RSI close above 86 sell next day.
3. No matter what sell on 7th day if any of the above conditions don't met.