Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 153

The 2009 bear market ended for Chico's FAS (CHS) in January, and the stock moved higher, ahead of the general market which didn't bottom until March. In June and July, the stock took a breather and formed the broadening top. I bought at what looks to be about a week before the breakout, just as price moved sideways at the top of the pattern. “24 July 2009. Buy reason: Broadening top. New management took over in January–February, so a turnaround is in place.” This was a buy‐and‐hold stock because I wanted to participate in the turnaround. Upside target was 17 and 27. The downside? “Stop: 8.94 –17.5%. Stop used: None. Long‐term holding, but 8 is a good exit price.”

The stock performed, moved up in a graceful turn, and peaked at 16.57 on 26 April 2010, quite close to my 17 target. I should have sold there. The stock was just 2.6% below my target, having made it there in less than a year. Hindsight…

 Lesson: If the stock closes within 3% [or pick a value] of the target, consider selling.

The day the stock peaked, I placed a conditional order to sell the stock if the previous close was at or below 13.73 by October 2010. The order was 17% below the current high, but that's fine for a buy‐and‐hold, which often doesn't use stops at all.

About 3 weeks after the stock peaked, the company announced earnings that the market didn't like. The stock gapped open lower and continued down. Here's where the story gets strange.

The stock dropped all the way back to 8.22 (on 24 August, a 50% drop from the peak), but the conditional order never triggered. I must have removed the order but never made a note of it.

On 5 July, I wrote this: “This is well past the time to sell, but since I have so few bucks in it, don't worry about it.”

So the stock was within a handshake of my target and then dropped in half. Oops. I am tempted to write that I wasn't paying attention, but I was. I placed the conditional order the day the stock peaked, so my mind was in the game.

Anyway, fast forward to March 2012 after the stock had recovered and made what looked like two rounded turns. “I placed a trailing stop at 1 point below the bid, GTC [good till canceled] until 1 July 2012.” Two weeks later, I canceled the trailing stop of 14.64 and raised it to 14.91 because, “I think this is going to drop. It's a good earnings event pattern, and I don't want to ride it down a buck before it moves higher. Stop placed just below support.”

Four days later, I was out of the stock. “Sell reason: Hit stop. I was worried that the overhead resistance area would repulse shares and send the stock down after the good earnings event. I didn't want to ride it back down. My guess is this will drop but not much before resuming the up move providing the market moves higher. It has been [moving higher] but just by a little each day. If the market drops, which I expect, it should take this stock lower, too. But so far, I've been waiting for the general market to tank, and it hasn't.”

The stock did continue lower but only by 9% below my sale price. The stock peaked about a year later at 19.95 before sliding all the way down below 1 in April 2020.

I made 42% on the trade (including dividends), but it took just over 2.5 years to do that. However, that's almost 16% a year, which is quite good.

This lesson is worth repeating, though…

 Lesson: If the stock closes within 3% [or pick a value] of the target, consider selling.