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• Outside of earnings season, this technical setup is our best performing short-term strategy for hold times of 1 to 8 days.
• Stocks last week moved 10% to 15% higher within 2 days out of this pattern.
• Recent back-tests point to a greater than 80% probability of success within a week and a half with a tight 3.5% stop-loss The reason this works so well is that you have a very good stock that is oversold, with a strong long-term trend, that is showing signs of strength both before and during trading hours after a sell-off.
• The missing piece for most traders is qualifying the fundamentals and the gap between the technical entry point and the next level of resistance.
• If you just buy an oversold stock, its often just buying a falling knife.