Investing Tools for Investors Looking to Excel
10/21/02  

Chart Patterns to identify which have been highly predictive of serious price moves. 

1-2-3-aka Double Bottom This pattern shows a successful retest of a recent low, then a break of a trendline, and finally a break above the channel defined by retesting pattern. We need to see the break above the channel on strong volume. 

2 month Breakouts from Base- This is a break above a two month range, on high volume with a wide trading range and a close at the top of the range. 

Retracements to 50 day Moving Average (or other support) on Declining Volume - This is pretty self explanatory. Here's an example of this. On the retracements to the 50 day moving average, we like to see trading volume well below average. Concersely, on downtrends and counter-trend rallies back to the 50 day moving average, failures will often be signalled by pathetic volume. 

Oversold Stocks Breaking Above 50 day Moving Average- This pattern can  produce tremendous gains in a short period of time. This stock has gone to almost 12 in two weeks from the breakout, producing a 70% gain in two weeks. It is a pattern worth trading. Raise protective sell stops as the stock rises.  In this case, however, significant overhead exists, as well as an unbroken downtrend line, and a troublesome downward sloping 150 day moving average.

1-2-3-4's Countertrend Pullbacks- This is a pattern to watch in stocks you want to enter, but the stock is just too spiky or extended. This is basically a four day pullback, where the the third or fourth day trades inside the prior day range (high low). The next day, you enter the stock but only if you get an open above the prior day close. It is best to do this with trending stocks that do not have immediate overhead resistance of any consequence. 

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