N2 · Overextended Blowoff

Status: LIVE. Canonical id overextended_blowoff; short code N2 is display metadata only. Implementation: Scoring, State, Triggers. See The Screener System for the long/short family.

A vertical, climactic move that has gone parabolic — exhaustion before a sharp mean reversion.

Thesis

This is the upside mirror of mechanical reversion: when price stretches far above its own moving averages on accelerating, climactic volume, the move is running on momentum and short-covering, not durable demand. The rubber band snaps back. The edge is the statistical extremity of the stretch, not a view on the company.

Direction

SHORT.

What it looks for (planned triggers)

Pure price/volume — runs on the full S1 universe (no options dependency):

• RSI(14) extreme — above ~80 (the symmetric counterpart to A5’s oversold floor).
• Stretch z-score — % above the 20-day (and 50-day) SMA more than N standard deviations above its own trailing distribution (the same machinery A5 uses on the downside, oriented up).
• Volatility / range expansion — ATR or daily range blowing out vs its baseline (the climactic-move signature).
• Exhaustion gate — a reversal confirmation (first lower close, or a break of the prior day’s low) required for primed, since parabolas can extend.

How it scores

Triggers roll up none / partial / primed by count. The exhaustion-reversal gate is required for primed — a stretched reading alone is partial at most. Confluence with N1 (distribution) or N3 (failed breakout) strengthens the rank.

Pitfalls / when it fails

• “The market can stay irrational longer than you can stay solvent.” This is the riskiest archetype on the board — blowoffs routinely extend further than any reasonable stretch metric predicts. Treat partial as “do nothing yet.”
• The reversal trigger is mandatory. Shorting a parabola before it turns is how accounts die. The gate exists precisely to forbid that.
• Size discipline — even a correct call needs small size and a hard stop above the blowoff high; this archetype is about asymmetric payoff, not conviction.

Related

• Implementation signal cards: Score · State · Triggers
• The Screener System (vision)
• Screener Pipeline & Lifecycle (operations)
• Sibling shorts: N1 · Distribution Top, N3 · Failed Breakout
• Long-side mirror: A5 · Mechanical Reversion