Trade Significant Changes in Stock Ownerships

December 15, 2013 at 4:17 pm Leave a comment

The happening, we share with you in this educational newsletter is a situation where stocks in one-day find a strong change in ownership, mostly associated with news announcements. In the following charts, we highlight this happening by a Cyan Volume Bar, which highlights extraordinary high volumes associates with a big price move of the stock.

Cyan Bar: Extraordinary High Volumes Exchanged for GOOG

NeverLossTrading Cyan Volume Bar

Two types of happenings are differentiated:

Type-1: Strong upside price move associated with an extraordinary high exchange of stocks.

Type-2: Strong downside price move associated with an extraordinary high exchange of stocks.

To identify this happening, we recommend developing a specific scan, which lets you know on a daily basis stocks with a strong volume and price move. Here are the scan results for December 13, 2013.

Stocks with a Significant Change in OwnershipNeverLossTrading Cyan Bar Stocks for December 16, 2013

After recognizing the happening, what are potential trading strategies?

Strategy-1: Trade with the Strong Upside MoveNeverLossTrading Strong Cyan Bar Up Move

This is the easiest strategy to follow. A stock produces positive news, opens higher with extraordinary volume and the price move is followed through by other institutional investors. We then use our genius and trade along with the move.

The target for the trade shall be set at 2-SPU’s (two Speed Units = 2 x the expected daily price move at the cyan volume bar).

Another way to trade this situation is to trail the stop; however, after a 3-SPU-price-move, following the trade initiation candle, there is an 85% chance for a retracement where you might sacrifice already booked profits. Hence, profit taking is the right measure.

Strategy-2: Trade with the Breakout

NeverLossTrading Cyan Volume and Breakdown

Even so the stock reported better earnings, the stock price broke down. Our Strategy:

  • Mark the high and low of the breakdown candle
  • Trade along with the price-breakout from the price range defined by the high/low of the breakdown candle.

In case the price breakdown gets followed through, we also trade along with the new price move for 1-SPU or 2-SPU’s.

NeverLossTrading Cyan Volume Bar Breakdown and Follow Through

Strategy-3: Trade Exhaustion on the Top

Cyan Volume Bar Exhaustion Move

The price shows a strong upwards price move and produces what we call a trend exhaustion candle. This candle ends the uptrend, produces new owners, who quickly run away from the stock when prices fall. Our trade strategy again is easy: We trade along with the price move, when it breaks the low of the Cyan Bar Candle.

The Significant Change of Ownership is just a small trading strategy and scan, we provide for our students and members. If our publication triggered your interest in NeverLossTrading, check which type of trading system will suite you best and we are glad to provide you with a personal consultation: Call +1 866 455 4522 or contact@NeverLossTrading.com

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Entry filed under: Financial Market Investment, Investor Education, Price Prediction, Stock Market, Stock Trading, Technical Analysis, Trading, Trading Education, Uncategorized. Tags: , , , , , , , , , , , , , , .

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