Page 246 - How to Make Money in Stocks Trilogy

128 A WINNING SYSTEM

Price
C B Richard Ellis 100
Weekly Chart 80
70
60
50
40
34
Buy pointyypuy po
B Buy pointi t 30
26
Notice
IPO Notice how tight closeshow tight closesecw tigotice s s 22
dominate pattepattepattemina
dominate r rnn 19
* 16
F Flat t t 14
Flat base justbase justsbase
a a affter IPOter IPOr IPO 12
10
Volume © 2009 Investor’s Business Daily, Inc.
4,000,000
1,600,000
800,000
400,000
200,000
Jun 2004 Sep 2004 Dec 2004 Mar 2005 Jun 2005 Sep 2005 Dec 2005
Deckers Outdoor Price
190
Weekly Chart 160
140
120
100
Buy pointppoint
B Buy point
80
70
Noormal pullbackpl c 60
to buy pointnbuy p
yp
yp
50
Flat baset bas
40
34
30
26
22
V V lolume uppumeu 19
Volume © 2009 Investor’s Business Daily, Inc.
1,600,000
800,000
400,000
200,000
Sep 2006 Dec 2006 Mar 2007 Jun 2007 Sep 2007 Dec 2007
bases. Pep Boys in March 1981 formed a longer flat base. If you miss a
stock’s initial breakout from a cup with handle, you should keep your eye on
it. In time it may form a flat base and give you a second opportunity to get
on board. Here are a few more recent examples: Surgical Care Affiliates,
CB Richard Ellis, and Deckers Outdoor.
Here’s a New Base We’ve Dubbed a Square Box
After moving up from a cup with handle or double bottom, this formation
typically lasts four to seven weeks; doesn’t correct too much, usually 10% to
15%; and has a square, boxy look. I’ve noted this over recent years, but
finally we’ve studied, measured, and classified it. Here are some examples:
Lorillard, Korvette, Texas Instruments, Home Depot, Dell, and Taro. The
dashed line shows the buy point.