Dave Stock At Buy Point
The stock formed a short-stroke pattern, a formation that is quite unusual. It forms over just two weeks.
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The first week is marked by a strong advance — 10% to 20% or even more — and usually coincides with or comes shortly after a breakout from a solid base.
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The second week shows tight trading. The difference between the stock’s weekly high and low is typically just a few percentage points, without hitting a new high.
The high of week 2 cannot be above the high of week one.
You want to see light volume on week two.
The ATR ratio of week 1 to week to is better when bigger. In the video talking about “F” in 2022, it was about 3 to 1 and they said this was not good enough. 5:1 would be good. So a rise of 50% in week 1 would like a nice tight range of 10% in week two.
On Nov. 13, Dave stock gapped up 44%, hitting a 52-week high that resulted in a 51% weekly gain. Last week, shares rose less than 8%. That places the buy point for the short stroke at 94.96.
Pete wonders if this is the start of a HTF pattern as well. I got lucky and bought it at the end of the day
Daily and Weekly charts below. Nice earnings line on the weekly
Here is IBD article…
Stocks To Buy And Watch: Fintech Leader Dave Eyes Rare Buy Point | Investor’s Business Daily
There is also an embedded video from IBD live talking about some of the aspects of a short-stroke pattern, including sell signals.
For BlackBerry (BB) Example, set chart date to 1/2/2005 and look at the short stroke on 12/23/2003. Look at the low and declining volume on the daily. Beautiful. Look at the run it had after breaking out of that.
Update: found more articles…
Apple’s Short Stroke Signaled A Profitable Trade | Investor’s Business Daily
When To Buy Stocks: Why The Short Stroke, 3-Weeks-Tight Chart Patterns Offer New Buy Points | Investor’s Business Daily
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I think $SNOW fits the pattern. Week 1 33% price increase. Week two, definitely shows declining volume on daily. High of week two definitely below high of week 1. Week two range was 177.99-167.29=10.6 and 10.6/167.29 = 6.3% which is about a 5 to 1 ration with the 33% rise. Although, the 33% was not the full range as it did not finish at the highs, so it is not clear how that are dealing with that.
One article said a short stroke was usually an add-on pattern, so maybe I will put my limits at 1/2 position.
RKLB seemed to have the pattern
PAYO had it and seems to still be in the buy zone. Daily vol may not be low enough.
SEZL had the look, but the daily vol on week 2 was probably not low enough
ALAB, week 2 range may have been to wide relative to week 1.
Andy, can you ask Webby about $SNOW, $SEZL, and PAYO? Thanks.
Put URBN on your watchlist, this would be week 1.
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Pete, I think we need to define a short stroke pattern and discuss it. So it has to go up 10 percent at least from a breakout in a solid base. Then the next week can only trade in a tight range with light volume. Then the following week has to break out of that range. If you look at BB it broke out and just kept going. They said it was best to look at them on a weekly pattern. So here is Snow
Daily
So on the weekly chart it looks like it barely meets the criteria but on the daily chart you can see that the volume is going down nicely. Although I can see a cup in there I am not sure if it is a defined base. But I would say Snow is probably one.
RKLB, I can’t see that being one because it broke out of a defined base and went down 2 Weeks Then broke out again and that is where you are pointing at it. I would think that is just a continuation of the break out because there wasn’t a defined base.
PAYO. I do not think this is one either. It followed the pattern for the first 2 weeks and then failed to break out. It is now sinking back in.
My question for the pattern is if it breaks out and goes back into the pattern does that negate this from being a short stroke? (I would say yes) I would think it would have to keep going like BB did. If it sinks back in I would consider that a shelf. What do you all think?
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I believe SHOP fits the bill, daily volume has been declining and the weekly show a sufficient jump from a proper base. Breaking out from that short stroke today.
Daily
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Shop fell back down into the consolidation. So is that considered a short stroke now?
Andy, I think it is fine. Bill and Webby and others might have their own take. To me I see a prefect week 1 and week 2. Today it moved above the high. I don’t see a flaw.
To your previous worries about how proper is the HTF or Short Stroke. I will lean on Webby for my answer. He would say “it is in the spirit of” or “in the vein of”. He is saying that the general concept is that something happens and institutions buy up the stock and create the pole. Then they take a rest, but nobody wants to sell, so it moves sideways in low volume. Then they come back in for the next leg up, it breaks out and you buy. Then you watch for sell signals. He recently said CVNA was in the spirit of an HTF and he was talking about where to buy and what stop loss to set.
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Here is the problem with that quote Pete. If you can’t explain what a short stroke or HTF is, and I mean an A short stroke and an A HTF, than you really do not know what the spirit of, or vein of is. You kind of know what it looks like which will be fine in a raging bull market but in a bear market you will be in a lot of trouble getting chopped up. Webby knows these patterns like the back of his hand and is why he can say “It is in the spirit of”. But if everything looks like a pattern I am looking for than I probably do not understand the pattern well enough. Those are my thoughts.
Edit:https://www.youtube.com/watch?v=fJvFlLKa1KU
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