what are the best ways to determine a stock bottoming?

what are the best ways to determine a stock bottoming after a major sell off of major companies. Example: PEP When is the risk reward good for these types of stocks using charts and volume?

what are the best ways to determine a stock bottoming after a major sell off of major companies.
Example: PEP
When is the risk reward good for these types of stocks using charts and volume?

it could be a short term bottom but only for a \short term trade

focus on the MONTHLY and WEEKLY charts to find out if it is bullish or bearish

the monthly looks VERY bearish longer term

At some point, after time spent building a bottom the stock may act better then it's peers when the market is in a downswing. That would be one good indication that on the next swing it may make a good move. More volume on up days then down days would help. Seeing hammer like candle formations is another one. Any short term rally that does not change the position of popular 20 50 200 ma's from bearish to bullish configuration is a warning that that rally won't hold. These are just a few. Regards, F&D

Look at the similar stocks in the group, if it is bottoming while the rest are going down, then you have to make sure it is the leadership stock of that group. If you need to analyze a sector of stocks, you should construct their breadth and also align usually with the market phases as different stock groups will rally better in different phases of the market (early bull or late bull or even bear market).

You could also come up with an algorithm that groups them for you based on their cyclical structures and then you can analyze each group and their common cyclical structure. There's usually a major cycle in all of them, but their phases might shift a bit. As I said, unless you are trying to trade the utilities, most of the stocks bottom and rally together, but some of sectors will rally better or take off first depending on the phase of the market...

--
PEP sells consumer goods --but staples and not discretionary spending...

http://finance.yahoo...r?s=PEP Profile

The breadth of that group can be seen here in XLP --consumer staples;

http://etfinvestment...vance_decline_d

The stocks in the same group;

http://etfinvestment...dings.php?s=XLP


Just my 2 cents.

Edited by arbman, 28 July 2011 - 12:13 PM.

what are the best ways to determine a stock bottoming after a major sell off of major companies.

What kind of charting technique are you working with?

Fib

what are the best ways to determine a stock bottoming after a major sell off of major companies.

What kind of charting technique are you working with?

Fib

linear regression 100 on weekly 2 year charts

Sorry, I should had been more clear...what "type"? - Bar, Candles, Point and Figure? Fib

"Don't try to buy at the bottom and sell at the top. It can't be done except by liars." (Bernard Baruch)

I have to get going, but if you're bar charting, here are the best bottoming patterns as long as you adhere to the rules: 1) Descending Wedge Formation 2) Rounding Bottom (also known these days as a cup and handle) 3) Inverted Head and Shoulders 4) Scallop Bottom (which at times can take the form of a "W" formation) 5) A simple horizontal base Keep in mind that stock prices tend to have rounding tops and spike bottoms (which can include "Key" Reversals) as opposed to other commodities where you tend to have spike tops and rounding bottoms. Fib

"Don't try to buy at the bottom and sell at the top. It can't be done except by liars." (Bernard Baruch)

Exactly. By definition, if you are trying to identify a "bottom" in order to buy, then you are looking to buy a stock that is in a downtrend. Why not make it easy on yourself and look to buy stocks that are in up trends? I highlighted BIDU here at 600 (pre-split) last year, and NFLX at around 125 {plus Aapl and various other leaders}. A number of folks here thought I was crazy, telling me these stocks were dangerous, extended, and all sorts of such adjectives, and one poster even told me that his grandmother taught him never to chase stocks that were up. Another started posting weekly warnings here on Netflix. But now BIDU is is over 1580+ on pre-split basis and NFLX 266+, and the other leaders have continued to lead all through the bull market.

I know I'm not answering your question, but that's because the decades have taught me that the one you ask is the wrong question. The right question is "how do I identify stocks that are going higher from here?" Good trading, D