I like to look at perfect charts.
Why?
Because they’re perfect.
They show me what I should be looking for and what I should be trading and they train my mind for the subtle tell tale signs of greatness.
I also like to look at perfect charts and ask myself: why didn’t I catch that?
What was I looking at that I wasn’t looking at this?
What was I trading that I wasn’t trading this?
And here is one of those charts. $CMG. It’s pure awesomness and it has been rocking out for over a year and it is going to completely change which stocks that I look at.
Here’s the weekly chart:
Wow. That's all I've got. Wow.
This is a weekly chart and it’s awesome.
It’s going to change the way I trade because normally I look at low priced stocks most — we’re talking very low priced stocks — because that is what has worked for me in the past — but they are very dangerous.
You can only place a small amount of your capital in them and pretty much anything can happen to that capital due to frequent BK’s, delistings, etc.
But to see a stock like this — rocket from $60 to over $300.00. Wow.
Sure, you can say it’s easy to tell after the fact, but trust me there was a tell tale sign all along — and all the way up. Want to know what it was:
New Highs!
New highs nearly every single week
That white line is the 52 week channel. Do you see all of those new highs printing. Again and again and again.
A lot of traders weary of new highs. But for what reason?
Seems we all like to fade them. We all don’t trust them. We all don’t believe. But my motto is Breakouts, Continuations, New highs. That’s what strength looks like and it’s great to see this type of move possible in this type of stock.
My eyes have been opened!
Let the trades begin!
This post was written by...
David John Hall – who has written 127 posts
David has been trading non-stop for 6 years. He lives in Redondo Beach, California (an awesome place to live) and is super stoked to be able to blog about his passion here.
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where do we find perfect stocks like these?
Hi Bob — great set of questions you’ve asked — and if I had the answerto this one I would be updating this blog from a tropical beach somewhere while sipping a Corona and high-fiving mnyself repeatedly. :-)
Only half kidding of course. I have studied these types of stocks relentlessly and continue to study them daily. You can find great insight into how to find these stocks by reading the books of Nicholas Darvas, William O’neil, and studying the interviews of Dan Zanger.
I myself have noticed that most of these runs are visible day after day on the breakout lists that I watch. They start after a suprise even such as strong earnings no one was expecting or really good news. They blast off, consolidate and then shoot higher. A lof of them also blast off after already gaining 100% on the year.
I won’t lie though — it’s not easy to buy a stock that’s already up 100% from it’s lows, and then stay in one as it rises day after day. The desire to take profits is very, very strong.
What I have done is compile a list of things that appear to take place in these stocks — namely breakouts, continuations and new highs. They stay above the 200 day MA deffininitely — a lot stay above the 50 MA and a few rocket off and stay above the 20 day MA.
My goal is to get anywhere between 50-100% gains on these and risk around 10%. It’s all a learning process because, like I said, if I had mastered it, I’d be blogging from beaches. And believe you me — I’d still be blogging because it’s tons of fun! Of course, as always, I post all of my thoughts here as I get them and test them and discover what works for me.
David John Hall
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