trending stocks will pause and have a "quiet period" from time to time, followed by explosive moves.
For Buys
- For buys, ADX must be more than 30 and the + DI more than the -DI, or RS must be 95 or greater
- Day two's high must be less than or equal to day one's high and its low must be greater than or equal to day one's low.
- Day three's high must be less than or equal to day two's high and its low must be greater than or equal to day two's low.
- For unptrending stocks, on day four only, we will buy 1/8 above the day-three high. Our stop will be 1/8 below the day-three low.
For Shorts
- ADX must be more than 30 and the -DI must be more than the + DI, or the stock must be downtrending strongly.
Day two's high must be less than or equal to day one's high and its low must be greater than or equal to day one's low.
Day three's high must be less than or equal to day two's high and its low must be greater than or equal to day two's low. - For downtrending stocks, on day four only, we will sell short 1/8 below the day-three low. We will protect ourselves by covering our short position 1/8 above the day-three high.
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