The Hockey Stick Price Action Sentinel

The Rationale (The "Why")

The classic "hockey stick" pattern is a sign of a strong bullish reversal. It occurs when a stock experiences a sharp, sudden sell-off due to some impetus, only to be met with aggressive buying pressure that causes it to recover just as quickly. The price chart forms a distinct "hockey stick" shape on a chart.

This pattern is significant because it indicates a failure of selling momentum. The rapid recovery demonstrates that buyers are in control and can absorb all the selling pressure and reject the lower prices. This can often serve as a powerful signal for a potential entry into a new short-term uptrend. This must be combined with other tests to evaluate whether the trade is worth taking - longer-term trend evaluation, rate of price/volume change during the drop/recovery, equity liquidity, quality, etc. The Bluewater Trading Price Action Sentinel performs all of these and notifies you only about the top candidates, making it a powerful trading assistant.

How to Use It (The "What")

Unlike our scheduled scanners, the Sentinel is always watching the market during trading hours. When it detects a valid hockey stick pattern, you will receive an immediate notification.

1. Log into the Webpage: Use your email address and password at https://flightdm.com/alerts.php. Pin the page in your browser; you'll need to keep it open, at least during market hours. Confirm its permission to play alert sounds.
2. Receive the Alert: A "toast" notification will pop up on your screen, and you will hear an audible "ping". This is a time-sensitive signal, and as we've learned over the course of long practice, the quicker you take advantage of it, the better.
3. Confirm the Pattern: Pull up the stock's chart with 30-minute bars and confirm that you see a clean, sharp drop and partial recovery. If you want confirmation, look for strong volume on the recovery leg, as this validates the buying pressure.
4. Assess the Context: Consider the general trend. Is the broad market or tech (SPY/QQQ) generally trending up for the day? A hockey stick pattern is most powerful when it aligns with the overall market direction.
5. Plan Your Trade: If you choose to act, this is an entry signal for a long position - either purchasing stock or entering a bullish options strategy. For the former, a common risk management strategy is to place a stop-loss just below the low point of the reversal pattern. For the latter, risk management is easily defined with spreads.

The goal of the Sentinel is to alert you to these powerful but fleeting opportunities the moment they happen, giving you the chance to act while the momentum is still strong.