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We can call them dragons, but this thread is about whales. I'm talking about dragons that break out with a 50% gain in one day. They out there, and they're attainable. Aside from DJH's dragon search, I think I have a way to create an ongoing watchlist of potential whales.
Let's look at this one that exploded 47% today, and reverse engineer how to find it yesterday.
Step 1. First, create a scan that finds stocks that have a price percent change of the absolute top range, 20%+ today, and also Volume surge today that is a serious surge, at least 2-3x. This will create your Dragon incubation watchlist. I came back with about 30 candidates today, which is probably higher than norm due to the explosive day in the market. Add these to a seperate watchlist, I named mine Dragon Incubator.
Step 2. From there you want to watch the list.. The big run up might not end in one day, but eventually it will, and it will begin consolidating and forming the dragon head. One this happens, you want to see volume drying up noticably, and the price consolidate downward into a tight range. I would say once you get 5-10 days of this action, you want to graduate this egg into a new watchlist...the hatching watch list.
Step 3. Towards the very end of the trading day, you want to update your telechart and check in on your Incubator shortlist, and look for those with a price & volume surge. price should be visually breaking out of the range. This is your buy point. Grab your lluevos and go long. Set your stop loss below today's true low. you could also put a buy limit above the days true high, but you risk losing ground with a gap up.
Step 4. Become millionaire.
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Here's a couple that look like a hatch in progress:
TEN
RDN
A couple other decent ones:
LVS & ASCA
Worth watching:
HBAN
XTEX
FOE
LEA
CNO
FITB
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Excellent ideas! I like the incubator metaphor and the hatching metaphor as well. It paints a very vivid picture of what's going on. I'm sure other traders might not care about the "story" aspect but for me it lines the trade up nicely. Thanks for sharing! Good luck.
David John Hall
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Possible live hatchings in progress, 11:24 AM EDT:
CAEI
COOL
the volume pattern on CAEI is not ideal but could still work out well
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Looks like these breakouts are the real deal. COOL is up another 11% since I posted this.
volume is skyrocketing.
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For those who don't want to wait a month to find the biggest potential winners, I have devised a workaround.
From my profiling work so far, I've found the biggest dragon breakouts first see a very large gain in a week or two, and then consolidate a week or two before breaking out. A way to find the biggest dragons in the market is simple: just run a custom date sort on the entire market on a two week period starting about 4 week out.
This will bring back stocks that exploded 3-4 weeks ago, and are more than likely in the consolidation phase. At this point, the dragons should be hatchready within days.
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captains log, stardate 6.3.09: dragon trading was successful today
COOL launched another 24%
CAEI dropped 6%
I also bought CHLN yesterday but didn't post it, however, it had a great day also exploding 24%.
There were a couple others I had my eye on but didn't buy that made huge gains today too...
AHD 38%
DVAX 32%
I will refine this approach down to a science before long. Everyday I understand more about how to find these whales. It's fun trading things that jump double digits the day you buy them!
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Have you used the free Patternz program to try and find the dragon pattern?
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Nice work Captain! Be sure to beam beam back any information you get as you boldly go where no trader has gone before!
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Never heard of Patternz, but quite frankly I don't think I would need it now. I've now got enough ways to find the most explosive potential dragons out there without it.
My main premise is that the dragons with the biggest potential are the ones that have had the biggest price advances in the recent few weeks. Custom date sort is the most effective means of finding those...give it a try. The rest of the pattern takes care of itself in most cases..anything that shoots up hardcore will naturally need a week or two to consolidate before buying surges back in.
DJH, thanks for the encouragement! I will keep posting.
Anyone else out there trying to trade these??
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Ben thanks for sharing your idea.
Can you please share your scan for step 1.?
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Step 1 can be achieved a couple ways...one is simply runing a custom date sort of the current day or past few days...this will bring the biggers gainers to the top of the list.
The other way is to create a scan that does the same and looks for a volume surge. But the latter may be redundant since most stocks that gain double digits in one day also have a volume surge.
to run a custom date sort hit the letter C and click on the start date and drag it to the end date. hit OK to let it sort and then you'll have your list of biggest gainers in descending order.
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Ben, Thanks for these picks man. I'm def a passenger on your train!
Z
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QUOTE (ben2k9) Never heard of Patternz, but quite frankly I don't think I would need it now. I've now got enough ways to find the most explosive potential dragons out there without it.
My main premise is that the dragons with the biggest potential are the ones that have had the biggest price advances in the recent few weeks. Custom date sort is the most effective means of finding those...give it a try. The rest of the pattern takes care of itself in most cases..anything that shoots up hardcore will naturally need a week or two to consolidate before buying surges back in.
DJH, thanks for the encouragement! I will keep posting.
Anyone else out there trying to trade these??
I do trade these, have had great luck with them. The Patternz program gives you more than just the dragon and is much easier to find than running all the sorts, I like your ideas you have been adding to the dragon just trying to find a easy way to manage the items to watch. I have been running a pcf to find the volume and price spike a week or two back with currently declining volume and then I sort them by the Linreg.
Do you scan the overall market or stick with things like the SP?
You are making some great picks, keep sharing, thanks!
Scott
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Scotty, I scan the whole market.
The penny stocks are where most of the big action is lately.
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QUOTE (ben2k9)
Here's a couple that look like a hatch in progress:
TEN
RDN
Looks like RDN is on the move today, and TEN is holding the breakout point as well, but has yet to really make a big move.
FR made a giant breakout today, but unfortately I didn't get involved in this one and I'm a little hesitant to jump in at this point. 40% gain so far today.
keeping a close eye on:
FITB (might just go for some)
NLS
MNI
On a different, more high quality note, Visa looks like a good breakout today.
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Ben, how are you? Just a curious note. Do you have a screen for volume on these lower price stocks. I have not run the Dragon scan on the world of stocks that I trade but I will see what I come up with. Why not trade the higher price stocks?
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Hi Apsll!
I'm not opposed to higher priced stocks, but the expected magnitude of the dragon breakout is roughly equivalent to the magnitude of the gain leading up to the consolidation. (this is classic technical analysis of a measured move out of a flag / pennant breakout) It's going to be hard to find higher priced stocks that have just had 100% gains within a few week period.
Also, lots of stocks are low priced now just because of the devestation of the bear market.
FITB looks hot today...went from $4 to $9 back in May, consolidated for a few weeks, and now looks ready to resume an upleg.
I don't have any special volume scan.
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ben2k9,
I do like the custom sort date,thanks, never knew it was even there. I have been working on the entry and have found some interesting patterns coming from something tobydad uses, the tsv with bollinger bands. I am also looking at the 14 rsi with 20 bb and have found strong breakouts come from at a bounce or break and turn of the bottom bb.
Scotty
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Ben,
Doesn't FR fit your 3 step process? It had a big run up, then it traded within a range and volume diminished, then today would be the day we see the surge in volume and price. I would be hesitant as well after a 40% gain in one day but I do think this stock still has 10-20% left to gain. What do you think?
Z
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I would have preferred to catch it a little earlier in the move...missing 40% of the breakout makes me a little more cautious, but I think you're right, I think there's still quite a bit more upside. The breakout should eventually exceed the prior peak, which is over $7.
Maybe the best way to ride this dragon is to look for continued strength tomorrow and buy it when it gets above today's high.
I haven't perfected this method by any means, so any input & observations is appreciated.
Scotty: the custom date sort is quickly becoming my most valuable tool for finding these picks.
Also, for those studying the method, you should start getting some use out of the " [ " key. this backs the chart up one day at a time, so if you find stocks that explode today, you can back up to see what the chart would have looked like yesterday. more times than not, youll find a dragon head. Once the stock leaps 50%, it compresses the history and makes it appear like the stock exploded out of nowhere, but backing up with the [ key can shed some light on the breakout.
Here's a good exercise, do a custom date sort of just today, which brings today's top gainers to the top of the list, then hit the [ key to back up the chart to yesterday, and then just hit the spacebar to go down the list and look at the patterns that everything broke out of.
You'll notice these broke out of dragons:
GNBT 79%
MTMC 75%
NVAX 74%
DOMX 43%
SPCHB 43%
FR 38%
it's unbelievable!
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Ben, I like how you study price action. I have been doing exactly what you are doing for years with TeleChart and that is how I have come up with so many trading strategies. I have given a lot of thought to this whole Dragon concept just as I did when Davidjohnhall first came up with it.
I have looked at hundreds of charts that rallied since March (I used the custom date sort). And I notice that as price ascends that it does so in stages; each new step forming a pennant, consolidation or triangle befor moving up to the next level.
What I am getting at is that we are seeing a lot of these Dragon formations since March because that is how price action moves. I also did a study of stocks in my price range and found just as many "Dragons" June first seems to be the critical time for most of them made their move starting on this date. Is this the last big hoora for now or just the next leg up? I do not know that of course. It is a good idea to study volume patterns along with the price pattern.
I also did a custom date sort from July 2008 to March 2009 (this was a time of a great down trend in the Markets). What I found was quite a bit of Bullish stocks and guess what else I saw? Yes "Dragons". So searching for them in all Market conditions is a good idea.
I just thought that you would be interested in this information
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Good stuff Apsll. I think when you think about the market on its most basic level, it all boils down to two types of behavior: consolidations and breakouts. On all time frames.
Day traders, swing traders, position traders are all pretty much looking to identify the congestion periods so they can identify the breakout.
One wants their capital at work during the breakouts...not so much during the congestions.
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I should reiterate the value of performing analysis both early in the market session, and late in the session. I ended up doing my analysis last night after the close, and had CSKI & MRNA on my buy list for the morning, however, that's shot to hell now because MRNA gapped up 100% and CSKI 15%. Neither are now in a reasonable buy point for me.
I have been killing it lately with the whale strategy. Recent big winners include TEN, AXL, INSM, CRTX, COOL.
I sold CHLN prematurely, it has surged 76% since I sold it last week.
The hit ratio has been pretty high, with only a couple losers, and the losers were my fault for mismanaging the trade.
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Ben,
I got on to TEN with you, thank you for that. Where do you see this stock going? What is your exit point? It's got a lot of room up ahead before it meets any resistance. What are your thoughts?
Thank you
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How long would you watch these before you gave up on them? Is there any minimum volume or any other indicator you look for? Thanks
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Zeeshankaba,
I think this thing should hit $13/$14 like a magnet. I'd be looking to unload there, or take some profits off the table if momentum rolls over before then. (I used the CCI20 indicator)
Isaloga, These can consolidate for weeks or months. Volume should surge on the breakout, noticably, and I like to see the CCI20 indicator turning up sharply. If they just continue to drift, eventually competing trendlines should intersect and you will get a directional cue. Do you have an example?
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Thanks Ben.
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LEA looking hot
CABL....a sleeping dragon??
DAN
NCS
NMTI
REDF
WH
OMN
CRTX
These all look live.
I think I'm going to quit my day job! :)
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Thanks Ben
No examples - just wondered how long to leave them on a watch list.
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Tanks Ben for heads up on WH. I really like it a lot, just placed it near top of watchlist.
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Selling TEN now. Could be entering another consolidation, I'll walk with a 33% gain, and keep an eye out for another breakout.
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Ben,
I did the same about a few hours ago when it was up around .36 cents on the day. Hell of a run. Thanks again for the pick!
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QUOTE (ben2k9) Selling TEN now. Could be entering another consolidation, I'll walk with a 33% gain, and keep an eye out for another breakout.
Still holding all of mine, but tightened stop(s). I'm looking at TEN's last two big runs in early March and May. March run price was up 9 of 10 consecutive days, 7 in a row for May run. Day 5 in a row right now and I think that old resistance of 12-15 will be tested before major pullback. At least that's my working thesis for right now. Market of course needs to help by not collapsing. We'll see.
Wish I had gotten in on WH yesterday before the close...too extended for me right now but still watching for possible pullaback entry.
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Ben,
Do you see the turn aroud for TEN? It went from down on the day to up a good amount and the volume is solid. Do you think we may have exited too early? I mean making money is making money, I love it when I see the green numbers in my portfolio, so I'm not going to complain too much.
Zeeshan
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Its possible we exited early, but I think today will mark the beginning of another consolidation leg. We will see!
rolling the dice with a little BPUR at the close
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Holy cow, just logged a 25% gain on BPUR in 40 minutes. I pray it gaps up at the open!
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Hey Ben -- I'm right there with you.
Bought this morning at .32. It was on my list from last night. I've passed on a couple trades lately that gapped up +20 or 30% and then went onto run +100% in a single day.
Honestly, I think a 20% gap in a stock like this is about the same as a 5% gap on a higher priced stock. At least from what I am beginning to notice. Then the second wind comes in 1/2 way through the day.
Anyway, this morning I saw that the BPUR gap took price just out of the consolidation area and in I went. Glad to see you grabbed a nice trade as well.
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This is textbook!
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QUOTE (davidjohnhall) Hey Ben -- I'm right there with you.
Bought this morning at .32. It was on my list from last night. I've passed on a couple trades lately that gapped up +20 or 30% and then went onto run +100% in a single day.
Honestly, I think a 20% gap in a stock like this is about the same as a 5% gap on a higher priced stock. At least from what I am beginning to notice. Then the second wind comes in 1/2 way through the day.
Anyway, this morning I saw that the BPUR gap took price just out of the consolidation area and in I went. Glad to see you grabbed a nice trade as well.
I love it when a plan comes together!
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