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How to Know if Your Stock is Bottoming Out

Tags: stock
You have a Stock in your watch list and it is going thru a pullback or correction. You impatiently wait to find out when it bottoms out and enter a trade. It’s not surprising that you are just like any other traders and want to buy low (and sell high). Buying the stock or options on the stock too early could be painful if the stock goes against you, further down. So, how do you spot the bottom with decent probability? Here is a list of what you have to look for:

·         Check the fundamentals to make sure it’s a good stock otherwise and it was only a pullback or a   correction.

·         Check the overall market to see what the market is doing and also check if your stock is correlated to the overall market.

·         Check the sector your stock belongs to and check how the overall sector is doing. You can simply check a sector ETF.

·         Check different time frames. If you trade the daily chart, check the weekly chart too.

·         Check some of the indicators if they show oversold condition.

·         Look for bullish divergences.

·         Identify support levels.

·         Check out moving averages in different time frames, they could provide support too.

·         Use Fibonacci retracement levels to identify possible bottoms.

·         Use Elliott Wave Analysis to see if the correction or pullback has ended.

·         Check the volume to see if selling is decreasing and buying is increasing.

·         Look for bullish candle stick patterns.

·         Check your indicators to see if there are any bullish signals.

·         Check the Put/Call ratio to see if it has been decreasing.

This checklist can be helpful to identify if your stock is bottoming with high probability. In a similar manner it also can be used to spot tops.




This post first appeared on Smart Trading Ideas - Home, please read the originial post: here

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How to Know if Your Stock is Bottoming Out

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