Climactic Buy Setup on Major Support (#2)


Trading Strategy: Climactic Buy Setup (CBS) on major support (MS). Until the previous day NBTY closed with 10 out of 11 daily red candlesticks. It is a CBS because it is down at least five days; is far from its 20MA; had a pick up in volume; and had a reversal bar on the previous day. It closed with a Bullish Changing of the Guard (+COG), since it closed over its opening price. It is in an area of a major prior low, which makes it more potent Buy Setup. Additionally, the last five trading days have been on increasing volume, suggesting that the last of longs have been shaken out, and demand was great enough to halt the stock and make it close over its opening price, and in the upper 50% of the days range. The far distance from its 20MA also suggests a snap back is at hand.



chart courtesy of Mastertrader.com

Tip: A CBS with a +COG in an area of a prior major low often produces a tradable bounce as the relentless selling has come to a short-term end.

The Play: Buy over the high made during the first 30 minutes of trading, with a protective stop under $16.30.

Objective: Target in the area of $17.50 to $18.00. MEDIUM RISK

Play Review:

NBTY triggered 30-min. high entry and its explosive move provided the target to the high $17s in a single trading day!