Monday, July 30, 2012 2:13:28 PM
High, Tight Flag
Let's cut to the chase, shall we? What is your wildest midsummer's night stock dream?
Would it be grabbing shares of a stock just as it rockets past a proper buy point, then gains 100% or more in just a few months? Even after it has already doubled in price beforehand and just takes a short break afterward?
This dream does come true. The name is the high, tight flag pattern.
Once every few years or so, a stock comes along and moves so fast up in price that once you see it in action, you might think it's surreal. But it is real.
Indeed, IBD's research of the best stocks over the past 100 years shows only a small handful of stocks have formed this bullish pattern correctly. Many flag patterns have flaws. But if you correctly spot a high, tight flag, you might set your portfolio up for the ride of a lifetime.
The first notable feature is a gain of 100% to 120% over a span of just four to eight weeks. That's the flag pole. The stock looks like it has made a vertical ascent.
The flag portion forms over the next three to five weeks. In contrast, cup-type bases stretch from six or seven weeks to six months or more.The flag's shape must be taut. The correction from the high must not exceed 20% to 25%. Volume should drop to low levels so it moves off most traders' radar screens. Keep in mind that many flawed flag patterns do not meet all of these important criteria.
Taser International (TASR) produced a great flag at the end of 2003. The stun gun maker gave peace officers an effective alternative to using deadly bullets.
Taser rallied 123% over an eight-week period from mid-October 1 as the market was in the early stages of a bull phase.
Then the stock declined mildly, giving up just 3% each in the weeks ended Dec. 19 and Jan. 2, 2004 2. Volume dried up. The correction was held to a mere 16%. As the base formed, it never touched the 10-week moving average.
Taser surprised investors again as it broke out past the 31.27 buy point in higher volume in mid-January 3.
From there, it gained 310% before peaking in April.
http://education.investors.com/article/577544/201107071546/investors-corner-high-tight-flag-a-thing-of-beauty.htm
Let's cut to the chase, shall we? What is your wildest midsummer's night stock dream?
Would it be grabbing shares of a stock just as it rockets past a proper buy point, then gains 100% or more in just a few months? Even after it has already doubled in price beforehand and just takes a short break afterward?
This dream does come true. The name is the high, tight flag pattern.
Once every few years or so, a stock comes along and moves so fast up in price that once you see it in action, you might think it's surreal. But it is real.
Indeed, IBD's research of the best stocks over the past 100 years shows only a small handful of stocks have formed this bullish pattern correctly. Many flag patterns have flaws. But if you correctly spot a high, tight flag, you might set your portfolio up for the ride of a lifetime.
The first notable feature is a gain of 100% to 120% over a span of just four to eight weeks. That's the flag pole. The stock looks like it has made a vertical ascent.
The flag portion forms over the next three to five weeks. In contrast, cup-type bases stretch from six or seven weeks to six months or more.The flag's shape must be taut. The correction from the high must not exceed 20% to 25%. Volume should drop to low levels so it moves off most traders' radar screens. Keep in mind that many flawed flag patterns do not meet all of these important criteria.
Taser International (TASR) produced a great flag at the end of 2003. The stun gun maker gave peace officers an effective alternative to using deadly bullets.
Taser rallied 123% over an eight-week period from mid-October 1 as the market was in the early stages of a bull phase.
Then the stock declined mildly, giving up just 3% each in the weeks ended Dec. 19 and Jan. 2, 2004 2. Volume dried up. The correction was held to a mere 16%. As the base formed, it never touched the 10-week moving average.
Taser surprised investors again as it broke out past the 31.27 buy point in higher volume in mid-January 3.
From there, it gained 310% before peaking in April.
http://education.investors.com/article/577544/201107071546/investors-corner-high-tight-flag-a-thing-of-beauty.htm
invest at your own risk, based on your own due diligence, at your own risk tolerance
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