Bottom fishing is a science to it. You will often here that catching knives is a dangerous game as you basically leave your privates exposed to decapitation. The key to really catching a knife is to find the squeeze zone. Often a stock that gets crushed 20-50% will drop all morning and then start to flatten out. Once that stock gets flat and breaks out of its first levels of resistance it enters the squeeze zone.
some things for to watch for.
1. Stocks that have dropped 20% plus. Emotional selling into it. Sellers up on Sellers piling on.
2. Look for stock to bottom out.. we are looking for a base a flattening of the stock.
3. Watch 20 sma to flatten also. 20 Sma signify’s the short term trend. When it flattens out that can signify a shorterm bottom.
4. then watch for a break over price + 20sma
