Sunday, 13 December 2020

How to Find Stocks that Go Supernova - The Setup 1 Strategy

Check out this Beautiful Trade Setup on $AP. 

I don't know about this company, what it does or its financials etc. I don't need to know that. All I need to know, first, is IS THERE A SETUP? If yes, then I can go and dig a little deeper, if I wanted to. But I don't need to do that in most cases, because you know why? 

I only select stocks that appear in my SCANNERS. I scan for the stocks that meet my criteria. I have a video on this here. How I Find Stocks That Go Up 100% | My Stocks Watch List on TradingView

This too was a nice, very nice setup $AP [I posted this on my TradingView Channel]

The Setup 1 Works Amazingly Well on Stocks on the days when they go Supernova. The thing is the Market as a whole, almost all charts usually stay within a choppy range because there is little interest from the market participants. There is no CHAOS. In the world of Trading Chaos Chaos means New Incoming Information)

 .... So, the question that comes to mind is WHAT are the times when we should look at a stock and trade it. Which time frames are best and when to use it?

In general, the Daily chart is great for almost all types of charts whether its stocks, commodities, futures markets, forex or crypto.

In order to make money in trading, we need to trade stocks or markets with healthy volatility. Most Stocks or charts don't have enough volatility on normal days. So, What is volatility? 

Volatility is the range of price change a stock or chart experiences over a given period of time

A low volatile stock or a forex pair will have less chance per amount of time. It will receive less number of volume (if stocks) or ticks (if a forex pair on mt4 platform). 

This also means that if you break the Daily candle into smaller pieces i.e. change time frame to hourly or the 5-minute chart,  the chart is fragmented. There isn't much action going on. Which is why you won't see a nice lovely smooth chart.

The Charts Look like this when there is no volatility or volume. 

However, there are times when the volatility increased 2 or 5 folds from its usual. That's when the charts on lower time frames are smooth.

Chart Patterns Require Data per Time Period

You see, the charts are plotted with Price on the Y-axis (the vertical numbers on the right.)

and TIME on the X-axis; the horizontal scale at the bottom of the chart.

The thing is the scale at the bottom never stops, it keeps ticking at a set interval. Its frequency can be altered by switching time frame.

However the data on the y axis, the price plotted on the vertical scale comes from the market. We can't change that bit of the data. Well, if we could then.. whooahaha... that would be awesome, but a whole different game. but let's not get into that.

And if there isn't enough data coming in per minute then the one minute chart will be EMPTY. So when a new 1 minute candle or bar is printed but there was no DATA from the market, it will be either skipped or printed as an empty single data point. Basically it means there was nothing to report during that minute. 

If a chart keeps getting very low tick volume it is going to not create a smooth chart. Where there are less than say 20 ticks of data per minute that chart will look very bad. Like the chart above. 

The above is a chart from the LSE. I just randomly picked it from the London Stock Exchange feed. This was a gapper and mover last Friday. Yet it has nothing. The Market was not excited about this company. Nobody went nuts. 

Compare this to the following chart.

the above chart also had gaps and missing data. It's a one minute chart of a US stock but not much volatility, no volume and not much useful information.

This company has a market capitalization of 157million. Hence not a very small company either.

The volume it had was 108 million stocks.

But then something happened.

In the Science of Trading Chaos Terminologies. CHAOS hit the market. Yes, NEWS came out. There was NEW Incoming Information. 

Something that took the market's attention happened on Thursday.

The NEWS Event: 
vTv Therapeutics (VTVT) was surging Friday, at one point climbing 118% to its highest share price since March 2018 at $4.75, after disclosing in a new regulatory filing late Thursday it exercised its right to have MacAndrews & Forbes Group LLC buy 625,000 of its class A shares at $1.60 each, providing the biopharmaceuticals company with $1 million in new funding.

And that resulted in this action.


That stock, with rubbish, dotty no data chart turned into this BEAUTIFUL Setup 1 pattern.

It was getting volume of around 20K a few days ago ... but when it opened last Thursday the 10 of Dec 2020, its first candle showed 380K volume on the one minute chart. that's a 15 fold rise in volume. So its RELATIVE Volume shot up. Aha, there is a hint. RELATIVE VOLUME

What is Relative Volume?
Relative Volume (often times called RVOL) is an indicator that tells traders how current trading volume is compared to past trading volume over a given period. ... So if it is showing 3.5 relative volume, that means it is trading at 3.5 times its normal volume for that time period.

So I ran a little test.

Did a bit of research.

and voila... it was out there all over the internet

There are 100 billion stars in a typical galaxy. Only a tiny fraction of the 100 billion stars in a typical galaxy. In a galaxy such as ours, the milky way, there are expected to be on the order of one supernova per 100 or 50 years.

But the universe is so large that it probably has more than 2 trillion stars in it. It is likely to observe about a million of Supernova per day. WOW.... 

Which means that if you focus your Telescope on the sky the size of a coin for a few hours you might find one or two Stars go Supernova. It is a RARE event yet the universe is SO Large that it isn't rare. Weird...

The Point I'm trying to make is this. Not every stock goes supernova over its lifetime. But there is a Universe of Stocks out there.  1-2 stocks go supernova nearly every day in the Stock Market Universe. 

To Find a Star that go Supernova Scientists use super-powerful telescopes like the Hubble Space Telescope and others. 

What type of TELESCOPE do we need to find those stocks that go Supernova? 
I will share with you one of the Tools I use to find these stocks. Visit here. Follow my profile. When I find a Stock that go SuperNova I will post an idea. You will receive a notification. Check out my TradingView Profile Now >>>>

Watch my video on How to Find Stocks that Go Supernova Here 

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