Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 138

National Fuel Gas (NFG) in late 2004 formed a broadening pattern. This pattern broke out upward, and I bought the next day, the same day the stock closed back inside the pattern (I didn't know it at the time).

From my notebook: “9 March 2005. Buy reason: Busted triple top, upward breakout from RABFD [right‐angled broadening formation, descending]. The other natural gas companies have stocks that are moving up almost vertically. This one is pausing from recent gains in the rounding turn. Earnings are weak, but the market doesn't seem to mind. I expect the stock to move up as it follows the other natural gas companies higher. Earnings come out in April, and I expect them to be good, sending the stock higher. I think the price is anticipating a strong showing. The stop is a close one just in case (7% away).”

On 18 April, I have this curious entry: “I removed the stop intraday as I was getting used to my broker. The stock dipped below the stop price, but I didn't have a stop in place, so I wasn't taken out. Stop remains at 27.43.” To me that sounds confusing, as if I removed the stop and put it back in, too afraid that price would take me out. It worked this time, but it's not a habit you want to form.

On 29 April, I was stopped out of the stock and took a 6% loss. The timing of the sale is odd, though. I sold when the stock was about midway down the height of the broadening pattern. My assessment of the trade says that I sold too early.

Indeed, the stock continued lower. Two days later, the stock busted the upward breakout when it closed below the bottom of the pattern. But that was as far as it dropped. The stock climbed from there, busted the downward breakout, and soared like I thought it would originally. The stock peaked at 63.71 in May 2008, a massive 133% above my sale price. You probably heard me yelling at the time about missing another big gain.

I picked the right stock, at the right time, but watched from the sidelines as it became an eagle and soared. However, I think I traded this correctly. I bought the day after the breakout, so I got in quick at a good price and sold when it was clear the stock was dropping. Waiting for it to turn at the bottom of the pattern, in this case, was not a mistake because it did break out downward. The stock just decided to turn back up from then on.

 Lesson: If a stock doesn't perform as expected, get out.

 Lesson: Don't lower or remove a stop unless you have a good reason for doing so. Being afraid price might trigger the stop is exactly the wrong reason for removing it.