All Entries in the "chart patterns" Category
Nothing Wrong WIT This One
January 5, 2010 at 7:55 am
Solid technical setups often times will have more than one positive thing going for them. It may simply be having the market’s wind at its back, or it may be more like the stock I’m going to show you today. WIT has made a monster run since the March lows of 2009, tacking on about 350% since then. And while that’s a really impressive advance, the fact is that the stock is still trending higher – and may be poised for more.
Not only does this one have the long-term uptrend and higher lows/highs in place after that move, but even just over the past few weeks WIT has exhibited some great qualities. It popped big in mid-December on a surge in volume to make new highs, and since then it has put in some needed rest. We also see on the chart below a pair of white arrows highlighting short-term higher lows as the stock sits just shy of resistance.
On Monday, WIT turned higher on a pickup in volume, indicating we may soon see those highs get challenged at the $23 level. If so, this is one I’m definitely interested in, so it’s on my radar for a play.
Here’s a closer look for you:
Trade Like a Bandit!
Jeff White
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LUV Still Adored
January 4, 2010 at 6:48 am
There’s a common desire among traders to “buy the dip” when given a chance, and I’m here today to show you one such opportunity. The idea of picking up stocks on even a minor discount within the context of a proven trend is indeed a good one – so let’s take a look at one chart of interest.
LUV, like many other airline stocks, has enjoyed quite a run over the past several weeks. The day to day action has been consistent, and although it hasn’t seen many huge individual days, the net result is an impressive 39% run over just the past 2 months. It may not be done either.
Even in the wake of the Christmas Day “underwear bomber” attempt (does that title ‘crack’ up anyone else the way it does me?), the stock saw only a very shallow decline before posting another gain to finish out the year.
The result of the dip has merely been some quiet consolidation on light volume, which has also created a small descending trend line just above current prices. A push north of that trend line at $11.60 could mean yet another takeoff for the stock (pardon the pun), so it’s on my radar for a play.
Here’s a closer look for you:
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
Eyeing Range Expansion in ACL
December 16, 2009 at 7:53 am
The ascending triangle pattern is commonly found within uptrending stocks, so in a bull market like we’ve been in since March, you can spot quite a few of them.
But just because it’s a bullish setup doesn’t mean the pattern will always pan out that way. In fact, I recently discussed pattern failures and the opportunities they can also deliver, so it pays to always stay on your toes.
I’ve been eyeing the chart of ACL in recent days with its ascending triangle pattern, and given the narrowness of the consolidation, this one looks like it’ll be resolved very soon.
Given that the trend is up, I’m on the lookout for continuation with a push through $164.50 as the next breakout level. However, this year I’ve seen a number of ascending triangle failures which offered some excellent signals, so it’s worth noting that if the lower (yellow) rising trend line gets broken at $162, it would be a short sell signal. Either way, this one looks ready for a decent move, so it’s on my radar for a trade.
Here’s a closer look for you:
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
Pattern Failures Are Worth Noting
December 8, 2009 at 2:44 pm
While the bulk of my trading revolves around chart patterns, and most notably the confirmation of them, failed patterns are certainly worth identifying.
Anytime a stock appears to be gearing up to make a move in one direction and suddenly goes the opposite direction, you can bet there are plenty of participants who are poorly positioned. Such is the case when patterns fail.
Obviously, the original plan goes out the window when a chart pattern fails, but that doesn’t mean you should turn your back on the stock. In fact, watching for plays to emerge in the new direction can often prove fruitful.
I just ran across an example that I wanted to point out to you. AXP had created a continuation pattern with a high channel following an uptrend, but price fell out of that channel last week to the downside. Now the stock is setting up for a possible secondary move downward, and it’s on my radar after seeing this chart today.
Here’s a look at it:
Trade Like a Bandit!
Jeff White
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4 Cup & Handle Patterns to Watch
November 17, 2009 at 3:02 pm
One of the most easily identifiable chart patterns is also one of the rarest – the cup and handle pattern. In this post, I want to show you a few which are developing right now.
The cup and handle pattern is sometimes misinterpreted, so let’s just review the basics…
First, this pattern must be found within the context of an uptrend. This is an upside continuation pattern, so the existing uptrend is a necessity.
Second, the height of the cup is important to note. This is the depth or distance from upper resistance to the low end of the cup, and it’s added to the breakout zone in order to determine a price target.
Third, a rounded cup is ideal. This suggests there were no sudden or sharp changes of direction, but merely a mild pullback and gradual recovery.
Finally, the handle portion will resemble a narrow channel, sometimes tilted downward, and may occur on light volume. This is the coiling action which will precede the breakout, and it gives the pattern not only recognition but also validity.
I just ran across a handful of examples that I wanted to point out to you. These are currently building their handles and may need more time to mature. The key is that this pattern is only confirmed upon a breakout, so that’s what I’ll be waiting for.
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
Profiting from Market Changes
May 6, 2009 at 9:12 am
It’s a strong tape – there is no doubt about that. When the NAZ has rallied for the previous 8 consecutive weeks (and currently gunning for 9) and the DJIA has tacked on 30% during the same stretch, you’re looking at quite a rally.
But during the course of that run, the pullbacks have been both temporary and timid. We haven’t seen a great selloff in quite a while, though that will change. In fact, for the past 40 trading sessions, we’ve seen no pullback which lasted more than a mere 2 sessions.
That means every single dip thus far (since the March lows) has been met with buying – quickly.
That also means that the standard bases and chart patterns in classic technical analysis have been harder to find. Yes, there are a ton of stocks in uptrends out there, but not many of them have slowed down long enough to produce a launching pad for stair-step type moves.
As a result, it feels like a lot of plays right now are momentum plays, whereby you’re hopping on board a train which is already rolling. That’s not entirely bad, but if you’ve been the kind of trader who prefers to let 5-10 day bases get constructed before taking entries for continuation moves, you’ve had to be pretty selective.
Or adapt.
That’s what I’ve done more of lately. Rather than wait for 1-2 week bases to build, I’ve actually been taking some plays which only rested for 1-3 days. It’s a mindset shift, and I expect it to be a temporary one at that, but it’s one which I’m willing to make for some profits.
And they’ve produced.
Here are a couple of plays I took recently and you can see the bases were brief. However, they were certainly worth trading.
Up first: WGOV. This one didn’t slow down for long, but the lack of a dip after such nice momentum hinted that some continuation could arrive soon:
StockFinder Chart courtesy of Worden
Then there was BYD, which also just didn’t seem to want to slow down. After running quickly higher, a brief 2-day pause was enough to inspire more upside:
StockFinder Chart courtesy of Worden
Last (but certainly not least), there was VCP, which we took for a multi-day move on the breakout through $9.25. Typically I’d prefer a little larger base for swing trading, but in this non-stop market I had to adjust – and it was well worth it for an impressive 2-day jump:
StockFinder Chart courtesy of Worden
It’s a simple fact of trading that the market is continually evolving. Sometimes the mechanics change, but there will also always be gradual shifts in how the price action plays out. At times there will be those classic chart patterns to trade from with larger, more defined bases. Not always though.
But when you know there’s opportunity and you sense a slightly different setup is worth taking, be willing to adapt. It’s the key.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Trading Video – Making Money from Mediocre Trades
April 7, 2008 at 4:19 pm
Here’s another video of a trading lesson I learned in the market today.
Not every trade is stellar, so naturally there are some poor and mediocre trades. Today’s lesson discusses the latter. This one has a simple solution and yet I’m surprised how so few traders actually do this.
Feel free to share it if you’re a fellow blogger, the embed code is on the YouTube page.
Without further delay, here’s today’s video. Enjoy the show!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Swing Trading, Trading Video, Investing[/tags]
