Reminder of useful patterns - emailed to subscribers - Tue, 22 Feb 2005

Gann pointed out the most profitable buying to be breaks into new highs (or breaks of long term accumulation), preferably moves into all time new highs. There have been plenty the past 6 months. Now of course not all breaks into new highs are equal, but as long as you do just one thing as a trader - or even as an investor too, sell out if the move does not continue, ie take your stop loss and don't hang on to a loser, you will make money over time. This preserves your capital to take advantage of the next stock breaking upwards. As a reminder of a useful pattern, see cpb.

Do note, the cpb pattern did not look quite like that at the time of the break, see cpb1, so keep in mind you sort of have to imagine how the break will look into the future.

And it is best to find a break where there is no overhead resistance. SEL has been another recently. The new highs list each day contains them. And if you don't see a pattern like this, be patient until you do, one will come along. Easy in hindsight I know, but these patterns, such as the triangle or rectangle with cpb1, do repeat from time to time, you just have to find one, buy the break, then hold till either good news comes out further on, (or keep holding whilst the trend is up, especially in a bull market, or until your stop is hit under the prior low. It will be when you sell that counts. (We will have a look at that later.)

Also, it can pay to know something of the stock sometimes: a stock with earnings will trend better, more orderly, than a stock without earnings.

So along these lines, CDA would be a stock to watch.

CPB Chart
CPB Chart (2)

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