Chart Patterns That are Working Now
As discussed in a prior blog post, late last year we did a study to determine which chart patterns are working best in today’s market. What is working best now on the elite growth stocks and companies beating their expectations consistently with rising estimates. The stocks featured in our Daily and Weekly Alert newsletters.
So the study was done exclusively on the stocks in our newsletters. So the findings of the study do not apply to average stocks – only to stocks that have rapidly improving characteristics that are proven to lead to higher prices.
The study showed that the cup with handle and rounding bottom patterns were among the best performing patterns. Not at the top of the list, but close.
These patterns continue to perform extremely well – even more so as we move further into 2013. Recently, we featured AAMRQ (American Airlines) breaking out of this pattern in late April. This stock had rising estimates and accelerating earnings beats.
Soon after appearing in our newsletter, AAMRQ nearly doubled within a month. We normally do not pay attention to penny stocks, but AAMRQ had the rapidly improving fundamentals to qualify as a trading candidate.
More recently we featured ADUS in the same pattern. This one was very text book. This is how the pattern looked when we featured it to subscribers. On a daily chart:
The pattern can actually be seen better on a weekly chart and you will need to change to a weekly view when searching for this bullish pattern. But you can see above how ADUS reaches a peak in early April and then pulls back in a sweeping or rounding motion thru April and then curls back up in late April and early May. This forms the cup. Then it moves sideways to form the handle.
Soon after we featured it, ADUS surged much higher. 20% higher within a few days. We are seeing a LOT of these patterns produce these kinds of moves in today’s market.
We will have another webinar soon where we will go over this pattern in more detail. And reveal more results of our study on which patterns are working best now.