All of this is important Lakedog because it helps me focus. Maybe I should just be looking at grade A HTF’s. If I can’t get those right in a bull market, where will I be in a market that is choppy? I may have become to loose in a market that is uptrending so thank you for your thoughts on all of this. It has made me think more on what I was doing.
Also on WVE, I was talking about it with another guy on Twitter and he said that I was counting the flag incorrectly. He said the flag started the week the pole ended. So instead of this coming week being the 6 week it would make it the 7th week. So I would be outside the trading of it anyway. Maybe I just need to watch and see what it does. So thanks for bringing your knowledge to the table, it really helps me crystalize what I am doing.
Happy Thanksgiving, I just bought my oysters for the stuffing and picking up the Prime Rib roast tomorrow.
In Friday’s video, Webby references this AXON (Taser) run as a chart to study, and to me it was more in the context of when it ended. He noted that it stayed above the 21dma until it didn’t, and that was the end.
This discussion has been excellent, so I want to add to the example of the end…
Nothing will end the same, but this is good. The end is of course the giant red downside day that ends below the 21dma for the first time. Two days before appeared to be the final climax. It was a great day and the price ended at the top of the range. The next day was up, but reversed off the high. Then death. A stop loss at the 21dma is probably mandatory, but that was far away, I wonder if a stop loss below that first climax was a proper place. Webby did not say.
This 21dma violation is something we can easily watch for.
$CVNA is another Webby talks about around the 26:30 mark.
In the vein of a high tight flag, but not a classic one. Huge comeback from bad fall (rare, maybe some short squeezing going on). Even if you are not buying this stock, you should be watching because it is similar to so many others now. Is it breaking out and working or falling apart, because when it falls apart, it could be ugly. It is okay if a few of these do that, but if a lot are, then the money is moving out of “heat” and you want to dial it back, maybe go to an XLF or PAVE. You can buy this CVNA breakout with a stop below Thursday’s low.
Summary of what he said…
Had a big outside day with downside reversal. This is a good reminder of what these high fliers can do. Webby’s special RSI tool triggered an offensive sell signal on Thursday (too hot). Thursday was the ugly reversal. If you have not trimmed yet, you should (says Webby). Go back and look at the old Taser run (2003, 2004). Study how that played out. Watch the 21dma, Taser (AXON) never fell below the 21dma until it was done.
I was going through my “heat” watch list and my mind kept seeing good things, so I am worried I am too optimistic. So I am going to say why we should by the following stocks, but my tongue is in my cheek…
DAVE is where SEZL was a few days ago, obviously you want to get in early now.
BROS is a definite buy when it tests the $50 level where it found resistance on the way up.
HOOD has “ants”, which sometimes signal a near term top. It had 1 downside reversal Thursday, but Friday it got it back. Clearly the bears are losing so time to pile on.
$ROOT also has ants and Thursday was a great upside reversal. Friday finished red but was also an upside reversal with support around the nice round $100 level. Clearly a break of the highs of the last 3 days is a sign of strength that must be bought.
Everything I said could be true, or it could be a delusion caused by the rose-tinted glasses of a crazy market. Thanksgiving week is good and everyone is at home Friday buying bubble stocks
One thing I would like to mention on Axon, Lakedog, is back in 2003 it was called Tazer. At that time I do not believe it was a penny stock. The reason it looks like a penny stock now is because of all the splits involved. That is what a HTF will do for any stock, look at NVDA, it looks like a penny stock at one time also. Just an observation.
Hey all, Take a look at INOD. The pole ended on 11/8. That was a friday. I am thinking that is when the flag started so this would make it the 4th week of the flag. This is a HTF ready to go the way I look at it. Does anyone disagree? What do you all think? I have a position.
I have my alerts set for the $50 breakout, but am not buying now.
RE: $AXON penny stock. Lake, when you use MarketSurge and set the date back, it will show the actual “Pre-split” prices of the stock. The chart I posted showed a peak of $64.
Andy has been showing us a lot of flag poles and flags and wondering if they are ready or perfect. I think we can be less strict in a market like this. Like Webby said about CVNA “it is in the vein of a HTF”, and thus he bought it with a stop-loss below the lows of the flag. We can be in “close-enough” stocks while waiting for the perfect HTF, then we can sell the imperfect and buy the “perfect”. Andy, you are asking the right questions and making us think, keep doing it.
On a weekly chart, I think it’s a continuation. It had one week down but regained it’s trend quickly. It’s hesitating here, but undecided if it should continue or not.
Hard for me to call that a flag yet, but if I try to hallucinate it as such, let’s look at and think about O’Neil’s elements to a HTF:
100-120% gain in 4-8 weeks. Okay, the massive 1 week gain candle includes a gap-up and is 100% by itself. If you measure 4 weeks back from it, that could be considered the start and it is 5 weeks with 168% gain. So is 1 week okay? Is 168% too much and he wouldn’t call it a HTF? I don’t understand how “hard and fast” the rules are. Realize some give and take occurs but they seem pretty hard-core with cup depths, etc.
Stock pulls back 10-20%, even to 25% in the next 3-5 weeks. Okay, using the earlier start and calling the end of the large candle as the final part of the pole, the next candle has a 15% drop, but it’s only one week with massive volume compared to average. Hard to call the next two candles consolidation with higher-highs and higher-lows.
Breakout. Stock needs to clear the flagpole with daily volume at least 40% above average. Next to last candle does meet that criteria. But it’s only the second week out. Hard for me to swallow single candle consolidation, but I don’t know.
So, I have a hard time calling it a HTF. Does that mean it’s worthless?? Heck no. Looking at the daily, it still strikes me as a gap-up with continuation. Not the strongest play just as a description, but it has an awkwardly acute ascending triangle pattern. Interestingly, Fibonacci retracements starting from the open on 11/5 has a nice overlap with retracements on the gap-up candle body. The former having a 38.2% line matching close to the magic 61.8% line of the latter. For those who play gap-up retracements, it would have been sweet. Bounced basically right at it on 11/15.
For a swing trade, I’d consider a break of 46-47 area, and hope for a solid continuation move. Might do a small one to put money where my mouth is. Kinda pulling back on trades as time evaporates around the holidays and I can’t always follow too many but we’ll see…
So this is a weekly chart. If you look at the down slope on IBD it looks to me like this is the 4th week of a down sloping flag. On your chart I see you are using wicks. What if instead of drawing that blue line sloping up you took the top wick and drew a sloping line down? I think I see what you are doing is using the body of the candles to form your trendline. I can’t do that with IBD and maybe that is why we are coming to different conclusions? Interesting. But with my Ibd chart the flag seems to be very clear to me but Sister Mary Jude always said I had a vivid imagination.
Ok on my chart that 120% is blocking what the pole is doing. I thought it went up into the 120% but when you explained that it makes sense now. I looked at the low and high of the candle on 11/8 and the next candle on 11/15 is higher isn’t it? I wouldn’t consider 11/15 as part of the pole though. So lets look at the daily.
So it looks like 11/12 was the top day at 49.72. Would we consider that the top of the pole? Then the flag starts making this the 3rd week? That might be the ticket. Read on Weekly but confirm on daily?
It’s above my pay grade to make any specific calls on HTF criteria. But I would note that most folks do look at two timeframes to best assess the situation and make a decision as to a play. I try to check one above and one below, but get pretty lax about that.
But sometimes a square peg just won’t fit in a round hole. While I say that in jest, I’m a touch serious. Just because there is a large 100-120% gain doesn’t mean it has to be a HTF. Plus, even if it’s not a HTF doesn’t mean it’s not actionable.
True Lake, I am just trying to figure out exactly what an A HTF would be. You know if the flag goes above the pole then pulls back in does that negate the flag? I think if we can’t define it than we are just butchering it. Now I consider myself a butcher and Pete more of a carpenter, Measure twice cut once, where I just take a wack with the cleaver and say, that’s good enough. But I still want to know exactly what a Tri-tip should look like and where the cut is.
Twitter is great. Ok I just talked to Mike Weber and he said that a flag going over the pole and then coming back in does not negate a high tight flag. He says that happens all the time.
So the parameters are up over 100 percent. Flag formed in 3-5 weeks. Then anytime between 3 and 5 weeks it takes off again. That’s it.
I’d still urge anyone interested to focus on looking at what flags are and similar patterns. They are all basically short counter-trends of consolidation following a trend, where traders are more matched in activity and marketmakers are assessing retail traders. But they are all followed by break-outs or break-downs. Learn, but learn what’s all on the menu not just the creme brulee. My minds on food for obvious reasons. It’s a wonderful time of the year.
Thought about this overnight. Part of our discussion has focused on my personal quirk of trying to fit things in neat little boxes. Having the highs and lows be very loose and calling it a flag is contrary to that. In classic technical analysis teaching that can’t happen and be defined as a true flag. I’m too focused on that definition of a flag. Many of IBD examples have looked more like short periods of consolidation, or what they have tended to call “bases” and are often numbered etc. Maybe we should call it High Tight Base or High Tight Consolidation.
Regardless, the better approach is probably to ask what is happening after the large increase (flag pole). It is consolidation, of course, with bears and bulls pushing back and forth. But are MMs sneaking in buys or retail traders pouring in?? Focus should probably be on finding clues during that period that might suggest as to the next move. The weekly interval is too short and small to ascertain, so the comment to “confirm on daily” may be the ticket. Maybe after I digest significant turkey and pumpkin pie I will try to investigate. Examples of moves, both successes and failures are welcome.
Happy Thanksgiving to all, travel safe and enjoy friends and families.
