DTers Weekend Aftermarket Lounge - 21-23 Sept, page-53

Should be good, BAT was a straight out chart based, channel trade with the usual bit of luck but the probability of a bounce off 24 was very high. The down bar on the 29th with above average volume was the fourth time that pattern had occurred in the last three months and all bounced.. Fundamentally I've got no idea and usually don't want to with many stocks but I know the reason for the down window was a financing issue.

BAT is one of those where the chart shows the emotions, they lose a finance deal and the sp plumments, I don't know that at the time but I notice the drop and I start to watch because I know there will be some very annoyed holders and some will sell immediately, usually with high (capitulation) volume, others will respond and buy and others will drift along with a "don't know" approach - all this results in a floor being set , in this case it was 27. This is the area where most market participants think it is fair value.

Then the easy part is to watch for a penetration of the floor. Then this is the first and only bit of a fundamental approach, is the penetration warranted by any announcement or anything else visible or did a holder just get bored or needed the money and some others followed.?

If the reason is not explained then give it a go - chances are it will return to fair value and this time I'll be holding, and also selling as soon as possible.

Sorry to be wordy but there is no real shortcut to explain ones like this, as I've mentioned before you can spend weeks planning a day trade.

Will it work all the time.? Nope.