Capitulation - Bank of America Corporation (Public, NYSE:BAC)

The banks went into free fall amid rumors and speculation regarding the government's bank stability plan. In early afternoon they capitulated on huge volume. BAC carved out a morning star reversal pattern, so it appeared safe to get long.

Capitulation volume spikes foreshadow that a bottom is near. However, if not accompanied by a clear reversal pattern, size it accordingly. In other words, be prepared to average down.

For this particular trade, I placed my fibs from yesterday's close to today's low because I wanted to be conservative in my expectations. I took a partial as price approached the ORH and exit balance on gap fill.