LT Price Crashes but forming a Support Channel

Traders often look for stocks that have take a rapid decline in price with the intention of catching them on the rebound assuming they have become oversold. The problem is determining when these stocks have established their low price. This example screens out stocks that have had a rapid decline over a relatively long period but they have also established some price support or a channel. They have not yet shown an upward trend yet. This example basically screens out stocks that have had a huge Longer Term (LT) decline in price in the last 50 days but in the last 15 days have begun forming a channel establishing some support. This is done by specifying that the price has dropped at least 30% from 50 days ago. In addition though we have specified that the today's price relative to the prices 10 and 15 days ago is not over 5% above or below any of them. This way we get a channel being established and a look at the daily charts makes this quite clear. This might indicate some price support is taking place although one might best wait for some kind of breakout. An additional note worth making is that you actually could specify that the high of the current day was higher than that of the last 15 days where the channel had been established possibly indicating the beginning of the price reversal upward.

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How to Screen Out these Stocks with ChartSmart

Creating this Filter List is quite simple. You can view the criteria and their settings in the criteria settings as shown. Next click on RUN FILTERED LIST, close the filter menu and go to the chart menu. Next click on the GRP button and then use the FORW button and BACK button to scroll through the charts in your filtered list.

Watch the video of this strategy.

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