Trading the "Fat Pitch" - There are lots of set-ups technicians use to make money in trading equities. Some are more successful then others and some work better only in Bull or Bear markets. However, there is one "set-up" that I have made money on consistently and in all types of markets....all I have to do is wait for the "Fat Pitch"!
Q: What is a "Fat Pitch" profile and how can I profit from it?
A: The "Fat Pitch" is a stock that has had a sharp sell-off in price and is now at point where we can successfully pick a trading bottom. It is usually a fast moving successful momentum stock that has had an extended run and has had a "hard" bout of profit taking occur. Sometimes the instrument trades back to new highs (which is the best "Fat Pitch") and sometimes it only bounces a few % points.
Whatever the success in % return is, the lure of a "Fat Pitch" is its 99% accuracy at picking a tradable bottom. Yes, we will say it again - a 99% accuracy rate - and when we are wrong, your loss is very small (assuming you use are recommended stop loss).
Let's explain in detail the Set-Up:
Using a daily chart, what is absolutely necessary is to have a combination of the following:
What will give us a higher degree of consistency and accuracy in the trade working is having the other technical indicators doing the following (these are not necessary but much preferred):
Q: What are the expectations of a "Fat Pitch"?
A: We would like the "Fat Pitch" to immediately trade to the upside like the example in CUP (AMEX), however, when picking bottoms a stock may sometimes flounder around for a few weeks before the change in price direction occurs. We have seen it take as much as 8 weeks before the upside move comes, but one thing we can say with certainty, there will eventually be an upward change in price direction with almost very little if any more downside in price.
FatPitches.com is a subsidiary of Insight Equity Research Group out of Chicago, IL. We specialize in momentum stocks and the "market timing" of them. Through 15 years of experience trading the equities markets we developed and perfected many types of market-timing set-ups. Two of our favorites are "Fat Pitches" and "Huggers". The "Fat Pitch" is one of are favorites for accuracy and consistency. "Fat Pitches" don't occur often, but when they do, its like picking money up off the floor.
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