Monday, December 29, 2014

Anatomy Of A Stock Chart Bottom

Quiet Accumulation By Giant Institutions
Short term bottoms are often a sideways pattern that slowly rises out of the low. It can be hard to see the bottom developing because the price is moving in such a choppy up to down pattern each day, so much so that it is hard to determine a bottom is underway. One great way to decide whether a bottom is underway or not, is to use TechniTrader® Quiet Accumulation TTQA in the bottom chart window in the example below, to see if quiet accumulation by the Dark Pools is underway.
The chart shows that a bottom is clearly underway when you study the TTQA in relation to TT Volume Bars in the middle chart window. The top is defined by the High Frequency Traders HFTs triggering orders followed by many smaller funds rushing to buy. The green Volume spike to the top of the chart window and the heavy green TTQA is the footprint of the HFT Market Participants. The small lots and smaller funds create the top as professionals start taking profits.  As the stock falls into a correction, red TTQA forms exposing selling short and some fund rotation. Then the stock starts what looks like another leg down, however TTQA turns gray and green which is the footprint of the giant funds that use Dark Pools.

As the green TTQA forms, the stock makes a higher low and begins the process of building its bottom. This is an up and down action within a range of price.  As long as it stays within that range, TTQA remains green and accumulation continues.
The accumulation continues for many days and the stock slowly moves up. TTQA turns green as the price moves slightly out of the quiet accumulation zone. This pattern is one of the most reliable patterns for determining when a stock has reached its bottom low and is likely to start forming a true bottom.
Price will continue to move up and down during accumulation because the giant Buy Side Institutions who are buying, are quietly accumulating over time and use a price range to do so. Learning to identify bottoms early helps avoid whipsaw losses when selling short. It also helps prepare to buy into the stock as it completes the bottom, and begins to accelerate with momentum energy.
Trade Wisely,
Martha Stokes CMT

Instructor & Developer of TechniTrader Stock and Option Courses
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1 comment:

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