Sagar
How to bottom catch stocks with the lowest-risk and the highest profit potential?

Bottom catching is hard. That is why many traders like to trade breakouts. Those are easy to locate.

However, the same stocks that are breaking out today were at a much lower price point in the past. And if you could catch them early, you would reap a much higher profit.

I have a technique to look for stocks at the bottom that are in improving industries and look for a low-risk buying opportunity. If the stock reverses after I enter, my risk is small. If it continues to go up, the reward is much higher relative to the risk. And if I can find a stock that is in an improving industry plus a stock that is fundamentally strong (in some way), then the chance of getting stopped out is lower.

It takes some effort to find such stocks.

And once you find it, they may not give an immediate entry setup. You may have to track the stocks for a few days or even weeks to look for a buy setup. 

That waiting is not difficult though. You can put them in a separate list and run the CUE scans on them every day. If the list is small, you may simply flip through the charts to see if they gave a buying opportunity.

Here is one such live example. You could find it by running the CUE Touch scan that looks for stocks that are hitting a Memory support trendline.

1) The Real Estate sector is one of the best performers on Friday 3rd Jan.

2) Retail REITs is one of the strongest industries in that sector.

3) $MAC pays a high dividend yield of 11.6%.

4) The stock is just 2.25% above the 52-week low.

5) On Friday, 65 peer stocks went up, only 2 went down.

6) MAC found support at the daily Memory support trendline and it closed the day with a bullish shape candle with a long lower tail.

7) Weekly Backdrop is still magenta (bearish) and there is a Memory resistance line nearby.

I am adding MAC to my list of potential bottom-catching candidates.

Depending on your style, you might take a position on Friday itself (probably, a partial position). You could short the Put for an even better overall buying price. And add to that position once/if the weekly Memory is broken. Or you could wait for the weekly Memory to be broken first before taking the position. It is up to your style.

When executed with patience and discipline, such trades can give a much higher profit than taking breakouts at the top. Here is one such example from the India market. $SUZLON ($SUZL.NS). 

8) $SUZLON gave a Headwind long reversal trade setup just two days ago. And then the stock shooted up.

9) It broke above weekly Memory resistance as well. Giving a very nice profit and keeping you way ahead of others. SUZLON's industry was getting stronger after a long decline when the stock started its up move.

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