Finding Stabilization After A Big Downtrend
Frank Zorrilla | Jul 11, 2013 07:31AM ET
I’m always on the look out for stocks that are stabilizing or have stabilized for a few days after huge down trends. Technicians will call this pattern bearish flags, which very simply is a bearish pattern that historically has led to lower prices. However since 2009 this pattern for the most part has turned into a bullish pattern. If you follow me on stocktwits or twitter you probably have seen me tweet about stocks that are exhibiting a character change, the last 2 I posted on that topic were RAX 6/21/2013 and SWI on 6/27/2013. These stocks if picked off correctly can lead to a decent short term risk reward trade. I tend to look for the stock to stabilize and get above a moving average that has acted as resistance for a long time, it is normally the 20 day moving average.
Today as I was going through one of my scans I noticed that a few stocks from the region were exhibiting stabilization after deep corrections. I find it very encouraging when I find a cluster of stocks from the same sector or region showing the same pattern similar to what I saw in the Miners NUGT GDX on 6/28/2013.
Some Brazilians stocks are showing this pattern and a few of them had inside days yesterday and also take notice of the string of Doji type days; BSBR PBR.A SID GFA GOL EWZ Disclaimer page for my full disclaimer.
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