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Double Bottom Watchlist Methodology

1. The Double Bottom is a special case of a general cup pattern so we start off by looking for cups meeting certain minimum criteria.

Double Bottom Watchlist Candidate Criteria

Item
Definition
Criteria
Current Close Current closing price as of the date the watchlist is prepared. >=$6 and >= 95% of 200 day moving average
Average Daily Volume The average daily trading volume per day over the prior 50 trading days. >=30,000
RSRank The stock’s weighted price appreciation over the prior year, as ranked against all other stocks in our database. >=60
Left Cup Highest intraday high that marks the beginning of the correction. none
Prior Low Lowest intraday low prior to the Left Cup. Rise from Prior Low to Left Cup >=30%
Base Low Lowest intraday low within the Cup. None
Cup Depth Difference between the Left Cup and Base Low, expressed as a percentage of the Left Cup. <=60%
% Retracement Percent of the Cup Depth the stock has risen above the Base Low. For example, a stock which has fallen from Left Cup = 100 to Base Low = 45 has corrected (100-45) = 55 points. A 38% retracement requires that the stock recover 38% of the 55 points lost, or (0.38)*55 = 20.90 points. In this example, to meet the criteria, the Current Close must be >= Base Low + retracement, or >= 45 + 20.90, or >= 65.90. Current Close >= 38% Retracement from Base Low
Cup to Date Trading days between Left Cup and Current Close. >= 25 days and <=325 days

2. Next we filter the set of candidate stocks with the specific criteria for a Double Bottom Pattern.

Double Bottom Criteria

Item
Definition
Criteria
RSRank Relative Strength Rank. The stock’s weighted price appreciation over the prior year, as ranked against all other stocks in our database. >=70
Base Depth Price fall from the left lip to the first bottom (B1) expressed as a percentage of.the height of the left lip. <= 60%
Pivot Height The center peak of the base is called the pivot. The pivot height is measured from the first bottom as a percentage of the Base Depth > 10% and <= 105%
Bottom Difference
The difference between the two intraday lows that form the double bottom measured as a percentage of the first bottom.
<= 4%
Bottom Separation The number of trading days separating the two bottoms >= 10 days

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