Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 111

Southwest Airlines (LUV) hit turbulence in late 1999 going into the start of 2000. A broadening bottom formed. Here's my notes from my trading notebook: “25 January 2000. I bought at market as the stock was moving up off the bottom of a broadening bottom chart pattern. At 15 3/8 [not split adjusted], the stock is cheap and shows support at this level. Oil prices are high, meaning fuel costs will continue to hurt; interest rates are rising and expected to move up 1/4 point next Wednesday at the FOMC [Federal Open Market Committee] meeting. However, as a long‐term holding, it's a good price to add to my position. I only bought a few shares because this could break down through the bottom of the pattern and move lower. In that case, I'll buy more. If fuel costs were stable, the earnings of this beast would improve (according to a Wall Street Journal article), so it's a good buy even though the general market is trending lower.”

As I read this, I see lots of warning signs, especially with the market trending lower. You want to trade with the trend, not try to push against it. However, I bought at the right time because the stock lifted off the runway (at the bottom trendline) and climbed.

The stock threw back and bottomed at the price of the bottom trendline again before making its way up to cruising altitude.

Fast‐forward to June 2000. Price had peaked and had retraced 18% off the high set in early May. Here's my notebook entry for the sale: “27 June 2000. I sold my entire holdings because the stock has pierced the support base of a descending triangle [meaning the triangle had a downward breakout]. With seasonal performance moving up in December and peaking in the spring, I missed the high by about $3/share. Ouch. Oil prices are high, raising fuel costs, and interest rates are still high, maybe moving up more. So, it looks like the excitement is over although today the stock is up almost $1.”

I sold and made 27% on the trade. As good as that sounds, I sold at the day the stock bottomed. After that, it climbed by 89%. Well, spit! This keeps happening if you read about my trades. The day I sell the stock bottoms and makes a substantial rise. It's one of those Catch‐22 scenarios. If I hold on, the stock will continue down. If I sell, it'll double in price, thumbing its nose as I watch from the sidelines.

 Lesson: Assess how far price might drop before selling. The trade might be worth holding onto longer if the downside risk is limited.