The SNAP Framework

The SNAP framework was a very easy tool that the good folks at MCMXCI Capital had developed for their traders. The Sector, News, Accumulation and Pattern combination usually leads to filtering the best names without worrying into minute fundamental aspects of the stock.

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Economic cycles usually have a 'flavour of the season'. At any given point, there will always be a particular outperforming sector. You ideallg want to invest in the top names of such sectors so as to ride on the momentum of the market in general and not just the on the specific name
Then comes the news bit. Usually, news which changes the fortunes of a stock are either their earnings or a regulatory change. These type of events lead to large elephant bars in the market. Zooming out on a price chart, you will find the ignition of major trends start from such elephant bars. It is important to note that the greater the volume, the greater the legitimacy of the move

The accumulation aspect is nothing but basing action of the stock. Any stock which has been accumulated by large institutions will go through a defined 'resting' period wherein it doesn't violate significant levels to the downside, nor does it have erratic price behviour. The stock might seem sluggish but in reality it is eroding volatility in favor of setting up a one directional inevitable move

The best price patterns have already been discussed. Usually when there is a recognizable base followed by a clear volume driven breakout, a stock gets picked up by every scanner, research firm, technical analyst out there. It's a self fulfilling criteria. But more importantly, an identifiable pattern gives you an obvious level to risk against. You know that if the price violates the lows of such a pattern, the market has decided to prove you wrong. It is at that point you exit the stock. But this clarity will develop when the pattern is easily and lucidly distinguishable.