IBD: High Tight Flag

He did not specify any success rate that I remember. But then, you’d have to also define what criteria makes it successful. Any break above the flag pattern? Or x-amount gain above the pattern? All he stated was that 80-85% was “optimal” in answer to a question of was a specific height better, or something to that general phrasing.

I asked Google about it and I was directed to Thomas Bulkowski’s work. Here’s 2 reference sites (almost identical but a few shades of variation). He listed 61% and 69% as success rates overall.

I know Buynholdisdead stated one time that he took a course from Trader Lion and I think it might have included HTFs. Curious if they listed anything.

But if you think about it, the pattern is simply the action telling you that there was a pronounced (in speed and strength) move up that when it took a break, it remained strong with shorter, tightening consolidation. Power never left it.

Lakedog

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I agree, that is the key. That is why Webby is comfortable with a pattern “in the spirit of…”, instead of Bill’s more rigid rules. Though there are a number of anecdotes where they were thinking an event (FTD, etc) did not meet Bill’s rules, and Bill would walk by and ask why they weren’t acting on this particular thing.

Put this on your HTF watch list.

You might want to ignore it.

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Andy, Thanks for the research! No need to put in on the list.

It really wasn’t research Pete. I have been noticing a few HTF’s that have been popping up and when going on seekingalpha I noticed they have been getting bought out.

OK here is a HTF that I was tracking.

I have been going over the class I had on HTF. There is a lot to pick up and I have gone through it twice but I am still not an expert. But I just wanted to discuss this because Pete asked a question about how they view a HTF. This is just one view.

So the pole in that is really good. Up 120 percent. They want to see at least 80%. Then the Flag they want to see dropping lower with volume decreasing so it is drying up. The flag they want 5 weeks long or less. Anything more than that would be looked upon with skepticism. That flag is 13 weeks long so instead of looking at it as a flag I am now viewing it as a consolidation. So another base. I have been kicked out of it multiple times during the forming of this base. I should have waited for the volume to dry up.

So looking at a HTF here is what you want.

Tight flags of around 25 percent
No more than 5 weeks to be formed but in bull markets can be 1 week

You want the N in Canslim for a new product

You want a steady 45 degree rise in the pole showing demand for the stock

You want the flag to drift lower and volume to dry up before breakout

You want liquid stocks that trade about 20 million dollars a day and have a high RS. The best ones have a RS of 97 or better.

You want stocks that are above 10 dollars.

That is the basics.

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Minervini explains it the best in discussions on volatility contraction patterns. Early investors harvest profits to induce initial pullback. Market makers start to enter to accumulate. Cycle repeats and “waves” recur with contracted range and volume as the big boys reduce available shares. Interest heats up and reduction in liquidity sends things up. HTFs are a special group of such. Like his thinking.

Thanks Buyandholdisdead for the details. Helps with the overall perspective.

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As you have found out Lake there are a lot of different takes on it. Oneill, Webby, Leif, Minervini, it seems they all have something to say but they all are building on what Oneill stated. A lot of nuances and different ideas. But I do like Minervini VCP pattern and when looking at a chart you can see the shelves being built on the way up as people sell and it contracts in volume.

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