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Criteria #1: A Power Spike Occurs
Explanation: The Power Spike is located by applying Bollinger Bands to the volume data. A spike technically occurs anytime the volume exceeds the upper envelope band, but we go even further.
Often a stock trading within a narrow volume window for some time can create a spike with only a small volume increase. These are NOT strong spikes and the quality of the predictive value is less due to the weakness of the spike itself.
For this reason, we want to locate only strong spikes that offer much better predictive value. We therefore place a more stringent requirement to locate only strong Power Spikes, which is explained in the next criteria element.
Criteria #2: The Power Spike Is Strong
Explanation: In order to determine the strength of a spike and establish a minimum standard for signal generation, a comparison is made of the amount of volume occurring above the upper envelope band to the total volume. In other words, how much of the volume penetrated the upper envelope band?
In order to qualify for a signal the stock must produce at least 15% of the total daily volume above the upper envelope band. This helps to assure that the volume doesn’t just pierce the upper band, but deeply penetrates through it.
This action indicates a strong Power Spike.
The daily Power Spike Signal Generation Report will display the exact percentage of penetration for each signal presented.
Criteria #3: Support & Resistance Level Established
Explanation: Once a strong Power Spike has been located, the system then defines the support level as the low of the spike day. It also defines the resistance level as the high of the spike day. This information is vital in the determination of which way to trade the spike.
Criteria #4: Support or Resistance is Fully Broken
Explanation: The system scans for strong Power Spike stocks where the price action has fully broken either the support or resistance level. All of the daily action (high, low, open and close) must occur either below the support level or above the resistance level. The system is set to trigger a signal as soon as the support or resistance level is fully broken.
We don't simply tell you when a Power Spike has occurred and then leave it up to you to monitor the stock for a support or resistance break. We monitor and track the action for you.
You are only notified when the stock actually breaks either support or resistance. That's the event that prompts your decision to trade or pass.
The daily Power Spike Signal Generation Report will display whether the stock has broken support or resistance. You'll immediately know whether the odds favor a long trade or short trade.
Criteria #5: Support or Resistance Break must occur within 15 trade days of the Power Spike
Explanation: Although the expected strong move doesn’t always occur immediately following the spike, time will begin to deplete the strength and value of the spike day. Spikes indicate “panic” trading, either excessive greed or fear. Over time the effect of that panic action will become diluted.
For this reason, the system scans for strong spike stocks which have fully broken either the support or resistance level and the amount of time between the spike and the break is no longer than 15 trade days. After this period of time the strength and predictive value of the spike can become questionable. Stocks that produce breaks after 15 trade days are excluded.
The daily Power Spike Signal Generation Report will display the number of days since the Power Spike for each signal presented.
Criteria #6: Average Daily Volume of at least 100,000
Explanation: Being able to quickly and easily enter and exit your trade is critical to success. This is trade liquidity. Trading stocks with low volume presents the risk of being unable to enter a position when desired or, even worse, being unable to exit a position when desired.
For this reason we have established a minimum average daily volume requirement of 100,000 shares. While you may elect a higher minimum requirement, this volume level has shown to meet the goal of assuring easy and quick entry and exit. The minimum average daily volume requirement is determined by applying a 50 day moving average to the volume.
The daily Power Spike Signal Generation Report will display the 50 day volume average.
Criteria #7: Stock Price between $5 and $25
Explanation: For short term trading purposes, this price range is optimal. Stocks below $5 are often far more volatile, easily subject to manipulation and difficult or impossible to margin. Stocks over $25 require too much price movement to generate an acceptable rate of return. The best return to movement rate is obtained with stocks that fall within the $5 - $25 price range. | 
