Rubber bands stretch both ways.

What has been published

The parabolic section of Kullamägi's three-setups article says most of these setups are shorts, but that good long setups sometimes appear, less often. The premise it gives: any time a successful parabolic short falls 50 to 60% or more in a few days, the conditions for a long bounce are there. It says such stocks can bounce 50 to 100% in a few days.

The entries

What the source leaves open

The article does not spell out a stop or an exit for the long version. The general principle it states for all three setups is finding low-risk entries on fast-moving stocks, with tight stops so that the reward can be several times the risk. Anything more specific has to come from your own study. The template and exits below are this site's suggestions, not rules from the source.

A study template (ours)

• The decline: percent drop from the high and number of sessions it took.
• Prior run: whether the stock was itself a parabolic advance first.
• Stretch: distance below the 10- and 20-day averages at the low.
• Trigger: which of the three entries appeared first, and at what time.
• Stop: the low of the day at entry, consistent with the other long entries described, and its size relative to ADR.
• Bounce: the maximum gain in the following one to five sessions.

Exits worth testing (ours)

A bounce of a few days is a different trade from a breakout that can trend for months, so the moving-average trail described in trailing winners may give back much of a short-lived move. Test alternatives against the same sample: selling into strength over the first days, a partial sale plus a tight trail, or a time stop. Judge them on the whole sample, not the best chart.

The parabolic long review

1. Confirm a decline of 50 to 60% or more within a few days.
2. Wait for ORH, a first green 5-minute candle or a range break.
3. Set the stop at the low of the day and check it against ADR.
4. Decide the exit rule before entry.
5. Log every example, including those that kept falling.