8-28-2016 comments

[Mike]

I have updated watchlists in the High Growth Stock section.

The attached word file documents the complete method of buying and selling the simplified system that I am using. The system contains one buy rule and six sell rules, and it is designed to keep you in longer to achieve the kind of gains that are available even in this range bound market. Also in this paper is the Coppock curve method I and others use to detect market changes from bear to bull market conditions. I included the Coppock discussion as there are good times and not-so-good times to enter a rally. The end of February was the time to enter the current rally.

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I will post the paper in a training section when Pascal shows me how to do that.

ACIA is one of the items on my watchlist. To own ACIA I had to buy it twice, getting stopped out once. I show in the image below my two buy points and one sell; I still own it. I consider my second buy about $1 late. My hope is that it will form a high-tight flag and then breakout. My desires require a lot of cooperation of Mr. Market. A high-tight flag forms when a stock price rises 100% or more in eight weeks or less (flag pole) and then forms a short consolidation (flag) correcting less than 20%. Rising this fast and then giving little of it back shows enormous strength. The buy point is as the price rises above the consolidation, making new highs. The flag structure requirements are the same as for an IPO base. Bill O'Neil has noticed that an IPO base is like a high-tight flag suspended in air without a flag pole. ACIA has corrected only six days so far, quite short. Otherwise, the pullback looks normal, and ACIA may have found support at the 38.2% retracement. ACIA is a leader in high-speed data center interconnects using fiber optics. There is a large changeout underway to 100G and 400G interconnects.

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[trader847]

Hi Mike. On the chart of ACIA you have "% Range 12/15Up(15)". Can you explain? Then there is "Power of Three" but I don't see one on chart? What are the diamonds above 5 of the price bars? And are you saying the buy point is $124.90?
Thank you - Frank

[Mike]

Hi Mike. On the chart of ACIA, you have "% Range 12/15Up(15)". Can you explain? Then there is "Power of Three" but I don't see one on the chart? What are the diamonds above 5 of the price bars? And are you saying the buy point is $124.90?
Thank you - Frank

Frank,

% Range is an indicator I wrote for eSignal to read out a bar cursor value for where the price close is relative to the high and low of each bar. It helps determine if a bar is showing distribution, support, stalling or accumulation. The formula is % Range = 100* (H-C)/(H-L). % Range is 100% if the close is at the high, 0% if the close is at the low. These are cursor values only, not visible on the chart itself.

The 12 of 15 up indicator is what creates the diamonds above the price bars. Bill O'Neil has these on his charts. A diamond is printed whenever 12 or more of the last 15 trading days has closed up. An alternative buy point is created if we get 12 of 15 up (sign of strength) followed by a short pull back and breakout to a new high. Looking at the ACIA chart, you can see a place to buy or add to the position after the green diamonds and pullback, the buy point being around a price of 65.50. The buy point is when price moves to new high ground.

The Power of Three indicator is something I wrote to flag whenever three of four moving averages have converged to nearly the same price (10-day, 21-day, 50-day, 200-day). When price bounces off of a convergence of moving averages, I believe this is a stronger structure than bouncing off of a single moving average. The chart I posted did not show this condition if it had the background would have changed from green to gray during the time of convergence.

You will also see diamonds above volume bars. These are historical volume trigger alerts (pocket pivots).

The high-tight flag pivot point is 124.90. You should demand high volume if this happens.