Buy the Bottom, Sell the Top

Buy at the Bottom...Sell at the Top

The Silver Package is all about Float Turnover Breakouts and Float Turnover Breakdowns.

Almost everything in Float Charts is counter-intuitive or counter-to-commonsense.  This is a very important idea because common sense would say "Buy the Breakout" and "Sell the Breakdown."  This is wrong and very dangerous to your financial health.  If you try this and don't know what you're doing, you will lose money.

There are four ways to use the Silver Package to make money on the long side of the market:

1) Buy when the price finds Support at the Lower Float Line also known as Overhead Support (see example) - Look at the BreakDOWN list every day and look for the stocks that are bouncing higher off the lower float channel line.  It's especially powerful if the stock gaps higher within the first few days after finding support at the lower line.  Many of the biggest moves start with a deceptive sell-off down to the lower float channel line. This is one of the best places to find excellent entry points with the best risk to reward money management. The theory here is that stocks that have gone sideways or lower long enough to come down and just 'kiss' their lower float channel line are in a distribution/re-accumulation phase. This is where investors who bought lower are selling to those at the new higher level. If the new ownership above the 'kiss' are holding their shares tightly then the price often moves higher very quickly by gapping higher. See other examples at our Archives

2) Buy the Breakout after a Float Turnover in a Correction (also known as Distribution / Re-Accumulation - see example) - After a stock has made a good run to the upside, it will often go sideways for one or more float turnovers. The theory to explain the sideways action is that those who bought at lower prices sell to take profits. The selling causes the stock's price to go sideways which is a called distribution. Once the ownership has changed and demand continues to be strong there are fewer and fewer shares available and this causes the prices to go higher. Many times the sideways corrective action corresponds exactly with the stock's float turnover. There are several types of sideways formations. Some see the top float channel drop a little like the one below. See examples at our Archives

3) Buy after a Breakout when it finds Support at the 50% Float Channel Line (see example) (known as an ABC LONG Float Set-Ups our Gold Package scans for these every day)
Once a stock's price moves above the float turnover at the bottom, it will at some point come under selling pressure and move lower. It might find support at any of its float channel levels. One very come place to find support is the 50% float channel line as is seen in the example below. See examples at our Archives

4) Buy a Simple Breakout (see example).   This is the most dangerous and difficult way to make money with our Silver Package.  The reason is simply that a Simple Breakouts usually leads right smack into resistance at the descending top float channel line and instead of the price heading higher it heads lower.  This top float channel line is first and foremost a line of resistance and hitting it often lead to lower prices.  The best way to play simple is to find stocks that have gone through a capitulation bottom or are coming off the bottom on very big volume.  These indicate that the stock is in fact at a bottom.  An example of a Big Volume Breakout is at the bottom of this page.  See examples at our Archives

The Bull Bear Float Rank - This extremely important indicator is part of the Silver Package.  The purpose of this indicator is to help the user identify broad market intermediate trading cycle bottoms and tops. The Bull Bear Float Rank number is plotted on a scale between 1 and 100 and is generated at the close of every market day and is plotted on a chart at the close of every week. To get the daily number, we add up the individual Float Ranks (see definition below) of all the stocks in the broad market. We then divide the sum by the total number of stocks in the data base universe and get an average float ranking. This average float ranking of all the stocks in the Float Charts universe is the Bull Bear Float Rank. The broad market repeats itself, alternating between bottoms and tops which is known as the Stock Market's Trading Cycle or Intermediate Tops and Bottom. Bottoms are characterized by William O'Neil follow-through days and tops are characterized by distribution days. The Bull Bear Float Rank adds clarity to this Trading Cycle. Typically tops come in with readings above 60 and bottoms come in with readings below 40.

Float Rank (for Individual Stocks) – tells us where the stock’s current price is in relation to its current float turnover price range. The ranking is from 1 to 100. For example, if a stock’s current price is $25 and its float turnover price range has a high of $30 and a low of $20. Its float rank would then be 50 because its price is half way between $30 and $20. If the price was $30 then it would receive a ranking of 100 and if its price was $20 then it would be ranked a 1. Stocks with high float ranks will be the leaders in a bull market as their price is always near the top of the float turnover range. Stocks with low float ranks will be the laggards in a bull market as their price is always near the bottom of their float turnover range.
 

Daily Breakouts - Contains stocks that are breaking out above a descending top float channel line for the first time in at least one complete float turnover on their daily chart. Breakouts are easily identified because the top float channel line will always be headed lower in its recent past and the current price will be seen penetrating up through it. The top float channel line may have flattened out when making a bottom but it will have been heading lower before this.  The closing price on breakout days may or may not close above the top float channel line that is being penetrated.

Daily Breakdowns - Contains stocks that are breaking down below their bottom float channel line for the first time in more than one float turnover on their daily chart. Breakdowns are easily identified because the bottom float channel line will always be headed higher in its recent past. The bottom float channel line may have flattened out when making a top but it will have been heading higher before this.  The closing price on breakdown days may or may not close below the bottom float channel line that is being penetrated.  Float Chart analysis is counter-intuitive. When thinking of a Breakdown, most people think that this means the stock is headed lower and many times that is exactly what happens.  BUT actually the lower float channel line should be thought of first and foremost as a line of support from which stocks often bounce higher.  Indeed many of the biggest winners start off as stocks that hit the lower float channel line in a deceptive sell off and then turn around gap higher and make huge runs to the upside.  Learn more about this at the page Support at the Lower Float Line.  And study examples of this type of formation at our Archives. 

The daily breakdown list is one the greatest values of a Silver subscription because big winners show up there.  They're the ones that are moving higher not lower.

Buy the Bottom

Here's An Example

Selling the Top

Here's An Example