When a stock that has been rallying for few months to years has a high volume gap breakdown with volume on breakdown day above 9 million (you can even reduce this to 5 million if you want more candidates) , it often signals end of wrong running trend.
Stocks like these become good short candidates after a brief bounce. This is a high probability setup.
In a year depending on market conditions 25 to 200 such setups show up. They offer 20% to 90% profit potential moves once they breakdown. This setup works best on stocks that were up 300% plus in 2 years or less before the high volume breakdown.
It is very easy to setup scan to do this in most software. I scan for these in Telechart and create a watchlist.
Some Recent Examples
If you are serious about making money trading develop a set of short setups. That will allow you to profit from stocks going down.
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