How to deal with Turning Point(兼答amr)

Question: I feel relatively easier to identify stocks which are under major resistance or already breakout. my question is: how to recognize turning point TP1? what signs a stock may have . I think is very important since you will notice a stock at the begining of a trend, you can be more proactive and wont worry whether you chase the stock or not.
regarding FTDW2-follow through day 1,what if the stock did close higher than TP1, but close red instead of green? let's use the example of TOL, on 11/12, it is FTDW2, everything is the same except the color of that bar is red,(what if the stock gap up, but close below its open price, although higher than TP1). in this case, is there any difference between these two scenario?

Answer: The best looking TP1 is price closed at the upper half of the bar and volume is heavier than previous days. If it also tests a major support line it would be better. The second TP1 of PD is better than the first one since the volume is much higher than before. This is also called a wash sell in TA point of view. All the people who want to sell this stock are gone and buyers will win the battle.

If you bought on a FTDW2 day you should put a stop loss at the low of TP1. The close of FTDW2 is not very important as soon as it could hold above the low of TP1. If the stock goes up from here you could increase your stop loss or stop gain point. I bought some call on 09/25 and exit on 09/29. I bought it back again when PD was above the small green line since I missed TP1 this time.

Following the second TP1 PD never looks back and now it's almost $120. Unfortunately I didn't eat the whole fish. This is why I said TA is not the most important factor in trading but emotion is.


1. PD










2. TOL

Following charts show how my system gives me signal and changes the state of stock accordingly.





On 11/13 the close is weak but the volume is also light. It didn't violate the stop loss which is 26.78(the low of TP1)
Nothing to worry about on this day. If a stock gapped up on FTDW2, it's a strong signal and the stock normally could be bought right away.













Look at from 11/14-11/16. Volume are much higher than before which means this stock is really bottom up this time.









My system catches up the small gap up and I bought it immediately.