Reviewing Jack's 'Bruno R' post focused my attention pack onto the daily charts. While reviewing The Final Universe one evening I noticed many of the 20% price runs had a similar candle pattern (attached). Notice, the 'Low' of the run. It frequently occurs on a down wick. Changing fractals for a moment, we see, on a 30 - minute chart, improved volume and price coming into the equity in the late afternoon which results in the candle formation (for the low) we see in the attached chart. The following day (again on the daily chart snippet below) we see price run higher. Such an event provides the fundamentals behind Jack's phrase, "We want to enter into a stock as it transitions from a score of zero or one to a score of seven or six." Recently, BTUI, GMXR and GROW each appeared to develop these same patterns at or near the time Stochastics (5,3,3) showed its formation as explained in Jack's 'Bruno R' post. Now, I have no way of knowing for sure, if the downtrend has ended, and a new uptrend has commenced (with respect to BTUI, GMXR and GROW), or even if the next price run plans to exceed 20%. However, looking for these candle patterns combined with the 'Bruno R' stochastics, appears to provide an improved level of anticipating the next price run or change in trend. Hope that helps. - Spydertrader <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=999599>
Often two or more adjacent candles combine in a more meaningful one (on a larger time frame). See bellow (attached). The Spydertrader's three candle formation is a white hammer on a larger time frame, bullish. <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=999622> Quote from Spydertrader: ... I noticed many of the 20% price runs had a similar candle pattern ... <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=999599>
In addition to the above cnms2 post which was very helpful for identifying some candle patterns, I actually see a a better two candle pattern called Bullish Engulfing that often points to a reversal.
When you combine the two candles you get ... a small body white hammer, that's a bullish signal. The "engulfing" attribute shows that during the second candle a bottom was formed and a higher high confirmed the reversal. In my opinion it is the same if the bottom formed during the first candle. What's important is for the second bar to close above the first bar's open, and this closing to be near second bar's high. Also, the hammer is more bullish when its body is white, small (less than 50% of the bar) and has no upper whisker (shadow) or just a small one. These hammers don't have to be bottoms, they can be continuation patterns.
Maybe when in doubt, zoom into a faster timeframe to determine what the current candle will look like.
i think it would be wise to consider what the volume is looking like when these pattern formations appear. not doing the above, you are effectively seeing in 2d as opposed to 3d since volume and price are the only 2 market variables that are observable. i would add, it is tempting to only consider price because of laziness. (very hard habit to break, it was for me anyhow).
Well, my plan for SIMO today, did not work out as anticipated. I had built a nice sized 2000 share position in anticipation of continued accumulation of this stock. Unfortunately, it appears as if I may have implemented this plan a bit too soon. As a result, I exited SIMO this afternoon when price exited the channel. Although today's SIMO trade resulted in a $263.00 USD loss, I wanted to post this trade to illustrate why taking a loss doesn't necessarily mean one traded poorly. According to my plan, I entered exactly at the point in time when I had planned to receive signal. I scaled into the trade in accordance with my plan's design, and I exited at the point where my charts told me the trade would indicate failure. While the SIMO trade did not result in any profits, the loss didn't result from any 'trade errors' on my part either. In other words, I feel great about the trade; I just don't really care for today's results. These things happen sometimes, and it makes no sense to get worked up over it. - Spydertrader <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1001077>
Spydertrader: I wonder what was your reason to enter long SIMO? It went public less than a year ago, it seems to be in a short term down trend, it was not in dry-up, and it doesn't seem to satisfy the quality universe requirements. When did you open this position?
I opened the position this morning. I identified it as a 'set up' on Friday Night. Actually, the chart pattern for SIMO appeared very close to the ideal set up as described in the 'Bruno R' Post. My idea was to accumulate stock while price drifted slightly lower, and have a fully built position when strong volume moved in later. Unfortunately, price declined much more than I anticipated. As a result, I ate the loss. The attached chart shows the uptrend (blue lines), downtrend (red lines) and stop offset (purple line) which I never used. I exited as price left the uptrend channel - Spydertrader <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1001198>
I also checked out SIMO as a possible BRUNO_R purchase today buy didn't like the daily stochastics display. Jack says in the BRUNO_R message that the stochastics should have "fallen rapidly to the 20% line". I didn't see SIMO doing his, it just sort of wondered down to the 20% range, well, that's how I see it anyway. I took a similar BRUNO_R purchase today with GMXR and got stopped out with a "wash" sale before it's big decline today (along with all the other Oil stocks it seems).