Down in the Sub

One of the many aspects to trade preparation involves the task of doing stock scans. Many traders use a variety of products either as part of their trading platform, or through 3rd party providers. What I want to highlight today is a particular scan I use to find Stochastics that are bottoming.

In my http://chart.ly/users/1investor chart postings, you may see me note things like "STO bottoming" or "STO curling ^" or even "STO _". I am sure you wonder sometimes what I really mean here. So I would like to provide an example from a trade that I put on last week.

The trade involves AMED (Amedisys Inc). I ran a scan use Stockfetcher to find me stocks that had a Stochasitcs reading under 20. After parsing through the list, I focused on this stock as it was pulling back to a rising 50 dma. The timing of the "STO curling ^" seemed to coincide with a test with that 50 dma. The addition of a hammer being printed on the daily chart gave me several reasons to put this near the top of my list.

The chart for today shows that the stock is testing prior Resistance (as well as the 20 dma) at the 33.30 level and is likely to flag here as it prepares for its next move. I am using 32 as my stop.

So the next time you see a comment from me about being "down in the sub", you'll have some idea of what I have been up to, uh er, down to. LOL