Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 139

Southwest Airlines (LUV) in mid‐2004 showed a similar situation. I identified a broadening pattern in the spring and bought after the throwback completed. In other words, I was late buying into the stock. Had I placed a buy stop a penny above the top horizontal line, it would have filled at 15.31 the day before the actual breakout. Instead, I bought in at 15.81, but that isn't too far off the optimal entry price.

From my trading notebook: “Mood (Will trade work? Bought too soon?): Cautious. Other airlines are moving lower, so I don't really trust this one. Long term, I think the price is a good one. Short term, who knows?

“Buy reason: Throwback from RABFD completed and oil prices are trending down. Since most of the fuel is hedged, the price won't make much difference. If it can push through the HCR [horizontal consolidation region] (flag in Dec 2003), then this has a chance of moving up.”

The stock formed a second broadening pattern and that one broke out upward, too, making a sharp rise upward (5% rise) in one day. The move looked like an earnings surprise where price shoots up and then retraces the move over the following week to 10 days. That's what happened here, except earnings came out a few weeks later.

My notes say I should have sold the day of the 5% spike and locked in a profit. Instead, I took a 3% loss when the stock returned to the price of the top of the broadening pattern, where I sold.

 Lesson: When the market gives you a gift (the 5% rise), find the reason for the move and consider selling.

I don't know if that's good advice or not. In earnings surprises, it can pay to hold on for months because the announcement generates excitement and that excitement pushes the stock up (after the retrace that is). In this case, I don't know what caused the 5% rise.