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Well, it has been 11 days (as of this writing) that this post was written, which yielded the chart on the above left. Since that time, on Friday, April 10, 2015 target 1 was reached. At this point, at a minimum, I would move my stop to breakeven. Why? Here is the reason:
Click on the link for the weekly chart of CFG. It is possible that we have reached the C point of a bullish XABCD pattern (that could resemble the Bullish Gartley Pattern, BELOW that current black trend line). Historically, the odds of that happening are about 30%, but with the market jitters for bulls of late, protecting equity should be job one. The odds are roughly 70% (given the value on this stock AND the rally that met the neural net criteria, it can still hit the retest of highs around 25.85, and perhaps go even higher.
What would you do in this case?
If on March 30, you were able to buy CFG at 24.50, and you were using a direct access discount broker that could offer you a penny a share to execute the trade, and you sold it at or just above 25.11 Monday, you would be left with roughly a 2% profit. If you were to hold and take a shot at the 25.85, which is not altogether unreasonable, that return would be roughly 5%. If you can wait, given the dynamics of the market, you might want to stay for the test of that level.
If you have a small account, you can just take the small profit and wait patiently for the next set up too. You definitely have that option.
I will continue to monitor this one.
QVOR Just Missed The Cut:
One more stock showed up on the list this weekend, but the nets were less than impressed with the pattern, and passed on it. The stock is Qorvo, Inc. (QVRO). Here are the particulars on it. Investor’s Business Daily likes the growth prospects of it (not that this fact is particularly relevant or perhaps even accurate). It is a high growth company that provides integrated circuits and components for major mobile device makers. That sector, along with all the names in it, are still in rapid growth phases and widely purchased by small-cap to mid-cap mutual funds and private institutions.
Why did this stock not quite pass the test? Check out the busy chart here. One criticism I hear often about this blog is that it is too long and too complex at times, but (and this is the part where I go redneck), “If don’t git you to read and understand what I’ma doin’, you won’t learn nothin’!” I would go for shame by adding “Life is tough. It’s even tougher when you’re stupid!”. If I had taken that tact, you would have left the blog, and I would have been sued by the estate of John Wayne for plagiarism. Now…where was I?
Oh, the key problems are these:
1) A lack of proper symmetry on that A to B leg of that A to B to C to D pattern. The lack of symmetry was caused by a very vicious sell off at the end of March.
2)The B point and the D point basically tested (and in the case of the D point violated momentarily the same 61.8% retracement level of that last up move from X to A). When that happens, the odds increase that the real symmetry level is below that original touch point, and could follow that dotted orange line down to right around $68/share. Remember when you bought the last high tech growth stock that looked like a rocket shot to the moon, and it fell to a second support level lower than where you bought it? Did you sell it, only to watch it later go to the moon? I know I had in previous attempts. If you said no, odds are, you are lying, and your pants are on fire. Admit it! That is essentially the possible outcome of this current set up, and as such the next walked away, as would I. Could I be wrong? ABSOLUTELY. But do I still have all my capital and the patience to wait for a better entry or another equally good or better opportunity? ABSOLUTELY! Patience to wait for the set up you want is one of the skills required for good trading and for good position investing and long-term investing as well. Ultimately, this could end up being a “three-drives-to-a-bottom” pattern. I will wait for that to occur before explaining it. If I don’t wait, this post will get EVEN LONGER.
Shameless Plug for Bruce Linker:
I will park it right there for now. I am working on tax items, the studio (and learning camera work and editing), and working with Bruce Linker to trade 5 markets with the improvements he has made in our trading models using TradeStation EasyLanguage. Do you need help coding your model from a programmer who is also a skilled trader who understands what you want when you discuss your ideas with him or her? If so, you need to contact Bruce Linker at www.linkertrader.com.