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RDWR
haven't talked about these in a while!
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Flag or pennant too, no?
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Registered User
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that's basically what a dragon is!
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QUOTE (ben2k9) that's basically what a dragon is!
Maybe until baseball season is over, its ok to call it a pennant.
Thanks
diceman
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Joined: 12/22/2009
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how do you suggest playing this one?
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you want to basically buy the breakout of the pattern, ideally in surging volume. There's volumes of old threads on dragon patterns..look them up if you're unsure
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bud11
this is a good start for info on this pattern:
http://forums.worden.com/default.aspx?g=posts&t=26559
Thanks
diceman
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Registered User
Joined: 12/2/2004
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Good find Ben on RDWR.
bud11, here's a link going indepth on flags by chart pattern guru Bulkowski: http://thepatternsite.com/flags.html. If moderator removes this link simply google Bulkowski. And diceman's link excellent too.
If you have O'Neil's book he does an excellent job of defining in great detail a cup's handle which is virtually identical to a flag.
As Ben states the classic play is to buy a break of flag's high on above avg. volume. But a lot of traders like to buy early in anticipation by entering with a small starter piece (1/3 size) on first signal that flag's low may have been put in, then adding if break above high happens. Key is to buy close as possible to low of flag (not always easy but some setups present the opp). Pros and cons to each approach.
PLM a good example of early entry method and how it has played out; it's a flag I watched for couple weeks....starter position at 1.93 near obvious support late last week. A add at 2.16 on Monday's high volume breakout. Yesterday's price/volume action signaled breakout failure imo, sold for near breakeven. Advantage of this method is that you're able to give the breakout buy more retracement wiggle room because of previous early entry at support and thus able to sell out with zero to minimal loss.
While on subject of flags/pennants/dragons, here are a few flags, some breaking out, some still resting, and some very early in formation:
AMCN
NPD
HSTM
NBIX
LEI
CHTP
QUIK
KERX
PEIX
MIPS
CRIC
REDF
SVNT
ANAD
GROW
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Registered User
Joined: 9/22/2005
Posts: 849
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This is a down sloping rectangular channel
The price broke out of the top of the channel on Tuesday.
However the volume was less than the 21 day average.
I will wat untl the price breaks the top of the flagpole.
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Today it broke out
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RDWR's morphing from one pattern to another. In first week is looked like a five day pennant...three days later a flag or dragon, a few days after that a channel as bcraig stated. Today I think it it qualifies as a shallow cup with hint of right side starting to evolve; would be great if a little handle forms near resistance (high of pole or the left side of a cup).
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looks like its moving in the right direction
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If you look at the weekly then it still looks like a dragon and an argument could be made for this being the handle in a larger time frame cup & handle....
I agree with Ben. This one is moving in the right dirrection...
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I hesitate to disagree with you guys who have much more experience than I do, but I see some major problems with this stock.
You are right fpetry, RWDR has formed what looks like a pretty little cup. But Bulkowski says that the cup should be at least seven weeks long. This one lasted only seven days. I think I will stick with the down sloping rectangle which the price broke out of on 10/11.
There is a problem with this stock now. It has pulled back to within the rectangle and recovered. According to Bulkowski in eighty seven percent of the time the price will continue to go down. If I was already in the stock I’d set a very tight stop or sell now. If I had not bought it yet, I think I’d watch it for a while to see what it was going to do.
As apsll likes to say, this just y opinion and I have been wrong more than I like to admit.
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QUOTE (bcraig73450)
I hesitate to disagree with you guys who have much more experience than I do, but I see some major problems with this stock.
You are right fpetry, RWDR has formed what looks like a pretty little cup. But Bulkowski says that the cup should be at least seven weeks long. This one lasted only seven days. I think I will stick with the down sloping rectangle which the price broke out of on 10/11.
There is a problem with this stock now. It has pulled back to within the rectangle and recovered. According to Bulkowski in eighty seven percent of the time the price will continue to go down. If I was already in the stock I’d set a very tight stop or sell now. If I had not bought it yet, I think I’d watch it for a while to see what it was going to do.
As apsll likes to say, this just y opinion and I have been wrong more than I like to admit.
Hi bcraig. Maybe we're looking at different things. I count about 34 days in the current cup. Bulkowski is in agreement with the father/founder of the cup/handle William O'Neil on minimum length of a cup/handle at seven weeks. The beginning of this cup (or potentially soon to be cup or cup with handle, and all cups/cup+handle) is its left side high, 9/14 close for RDWR (or 9/15 intraday high) . I see no breakout of sloping rectangle on 10/11, but that's just my opinion.
One thing I forgot to mention earlier is the small hammer on 10/7 which put in a bottom, bullish imo. All techincals that I follow looking good...price holding above the 50-day, TSV, BOP, MS (leading price), OBV.
I'll continue to watch it as long as it stays at or above the 50.
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You are right, Fpetry. We were looking at different cups and yours does conform to Bulkowski’s
definition, with the possible exception of the location of the handle.
The depth of the bowl is about 6.50, which would predict a rise to about 31.00. In fact it rose to thirty 37.7
before the handle began to form on 9/14. Bulkowski implies that the right side of the cup should occur at
abut the same level as the left side, and the handle should begin immediately.
Perhaps the pattern could interpreted as a rounding bottom rather than as a cup ad handle.
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Hey bcraig, really enjoy the detailed analysis we're doing...I like to do this because I think it keeps us always thinking and makes us better traders.
You are more up to date on Bulkowski, whereas I was weaned on O'Neil's cup/handle. I think Bulkowski implements some of his cup/handle criteria with O'Neil's. I don't yet see a handle, just cup w/o handle at this stage. O'Neil likes the cup w/o handle almost as one with handle.
You state a depth of 6.50, I see a depth of exactly 10.27 (intraday high of pattern minus intraday low). The percentage depth is about ideal at 26%. O'Neil states cup depth should be no more than about 35%, or 50% during bear markets. His handle center line is minumum five days, low volume, tight range, and in upper half of cup range. His name for a shallow'ish cup is a saucer.
In the end it all these names and labels and percentages don't really matter as long as we can quickly eyeball a good setup, then call it what we wish:)
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Here is the chart from which I took my depth measurement and predicted target of 31.00.
It can be interpreted as either a Rounding Bottom or a Cup and Handle. Upon reconsideration
I agree with fpetry that it should more appropriately be considered a classic Cup and Handle.
Note the small Head and Shoulders which formed on the right side of the cup the top of which
began the Handle.
BTW. If you are interested Bulkowski’s web site is ThePatternSite.com.
<a href="http://s264.photobucket.com/albums/ii173/bcraig73450/Snaps/?action=view¤t=RDWR.jpg" target="_blank"><img src="http://i264.photobucket.com/albums/ii173/bcraig73450/Snaps/RDWR.jpg" border="0" alt="Photobucket"></a>
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This my first experience with posting a chart. Ihope this does better than the previous one.
Here is the chart from which I took my depth measurement and predicted target of 31.00.
It can be interpreted as either a Rounding Bottom or a Cup and Handle. Upon reconsideration
I agree with Fpetry that it should more appropriately be considered a classic Cup and Handle.
Note the small Head and Shoulders which formed on the right side of the cup the top of which
began the Handle.
BTW. If you are interested Bulkowski’s web site is ThePatternSite.com.
http://i264.photobucket.com/albums/ii173/bcraig73450/Snaps/RDWR.jpg" border="0" alt="Photobucket
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Joined: 9/22/2005
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I see I need to explore Photo bucket more thoroughly to learn how to get y charts in the form you other
guys use. Any suggestions will be appreciated,
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Posts: 6,049
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QUOTE (bcraig73450)
I see I need to explore Photo bucket more thoroughly to learn how to get y charts in the form you other
guys use. Any suggestions will be appreciated,
See this:
http://forums.worden.com/default.aspx?g=posts&t=27860
Thanks
diceman
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Registered User
Joined: 9/22/2005
Posts: 849
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Thanks Diceman for the tip.
Once more I hope it works this time.
Here is the chart from which I took my depth measurement and predicted target of 31.00.
It can be interpreted as either a Rounding Bottom or a Cup and Handle. Upon reconsideration
I agree with fpetry that it should more appropriately be considered a classic Cup and Handle.
Note the small Head and Shoulders which formed on the right side of the cup the top of which
began the Handle.
BTW. If you are interested Bulkowski’s web site is ThePatternSite.com.
http://i264.photobucket.com/albums/ii173/bcraig73450/Snaps/RDWR.jpg
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Registered User
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Posts: 889
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QUOTE (fpetry) H
In the end it all these names and labels and percentages don't really matter as long as we can quickly eyeball a good setup, then call it what we wish:)
my sentiments exactly.
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Joined: 7/23/2010
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QUOTE (ben2k9) [QUOTE=fpetry]H
In the end it all these names and labels and percentages don't really matter as long as we can quickly eyeball a good setup, then call it what we wish:)
Over at the Stockbee site we have spent hours listing to our guru teach us the extreme value of picking just one method and learning and fine tuning that one method until it becomes second nature and as you so wisely mentioned above "we can quickly eyeball a good setup" .
Thanks for resurrecting the dragon. It is a method well worth studying and learning as many of you wise teachers from the past. have taught us.
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Joined: 6/6/2005
Posts: 1,157
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Hi Art, I like that stockbee blog, I've been reading him for awhile now. Are you a member over there? I can also attest to sticking with a single method. I trade a variation of the dragon on low priced stocks and it's all I've been doing for the better part of two years and it's like you really learn a ton.
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Joined: 7/23/2010
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I am a member David for quite some time now. The man's got it all together. And the Bluefin scanner that Dan has put together is very unique. I'm TireBuilder over there. What is your handle?
I appreciate your input and trading wisdom.
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Stockbee's method and the dragon are complementary...he looks for a breakout out of a consolidation, in strong trending stocks. This is all a dragon is, really!
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Hey Ben, you are correct, the Dragon is just an infinitely cooler way to say it. LOL
Actually, when I look at my recent trades I'd have to say that I confine my dragons to consolidations after first thrusts off the bottom...so in effect they're a little closer to weakness than strength. I think that first consolidation gives a lot of would be shorts time to pile in early in hopes of a reversion. Becasue of this I've been told that the dragon is also a cup with a handle.
To this I say, yes, but I know for a fact that a Dragon is cooler than a tea cup. Let's take a look:
Teacup:
Dragon:
Hmmmm. I guess that's all about perspective. My grandmother, a stout believer in tea time (with homemade crumpets), would definitely beg to differ!
Of course I'm only kidding. I wouldnd't care if it were called an old handbag as long as it worked for me.
Art,
I'm not a member of Stockbee, I just read the free blog. Though I've been thinking of coughing up for a quarter's membership just to support what he's doing over there. He certainly offers a lot of value.
I think it might be neat to put up a few dragons/breakouts/cups/handbags for review.
David John Hall
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DJH - lol...yes the dragon is way more badass than the teacup!
Although on the Chronicles of Riddick, Vin Deisel kills a man with a teacup...so that may be one exception.
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Hey thanks guys for mention of the Stockbee blog, just spent some time there for first time and first impression is that I like his style/method a lot, and he has a lot of great links and tips.
Yes, a lot of his setups are flags or pullbacks or shallow lateral bases coming off a prior uptrend of consequence. Nice.
I really like his emphasis on low float stocks and IPOs . I've tried screening that criteria in TC using TC's float filter, but like the guy says not all stocks' float is listed in TC. I compensate by limiting my stocks to small cap via capitalization filter/condition. Then I go yahoo or finviz to check actual float....some slip through my scan and have too many shares.
Another trader who uses similar method and offers great free videos daily is Harry Boxer at his site. His free videos usually show stocks that have already broken out but a great teaching aid nonetheless. He archives his videos going back weeks, maybe months.
Yes, the dragon often very similar to the middle and right hand side of a cup/handle...the handle often quite similar to a dragon head or flag.
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QUOTE (ben2k9) DJH - lol...yes the dragon is way more badass than the teacup!
I dont know, if your a democrat, teacups can be very, very scary.
(maybe a cup-with hammer)
Thanks
diceman
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Joined: 9/22/2005
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How do you guys find your dragons? I just stumble onto them while scrolling through watch lists.
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Joined: 7/23/2010
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You follow the links above to the original posts (or do a search for dragons) and read all the posts, then look for the scans which were graceously shared in the days gone bye. It's good stuff you won't regret the study.
Good Luck
Art
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QUOTE (bcraig73450)
How do you guys find your dragons? I just stumble onto them while scrolling through watch lists.
See my post above:
Posted : Wednesday, October 13, 2010 8:08:46 PM
Thanks
diceman
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QUOTE (bcraig73450)
How do you guys find your dragons? I just stumble onto them while scrolling through watch lists.
One method is very simple and it increases chances of discovering the setup early before a breakout. Strart a watchlist and scan for stocks that make a strong vertical move, preferably out of a longish base. Then start watching these stocks every day as they evolve. I really like this method because not only do some of the stocks I'm watching evolve into flags/dragons, others form other setups such as tight lateral bases, shallow cups/handles. I find the initial vertical moves with several simple easy scans, one being a pcf condition for a stock up 5%+ on 1.5X or more avg. daily volume. Then throw in personal conditions for price, avg. volume, capitalization, 20-day above the 50, 50 above 200, average BOP+ over 20 days. And of course sometimes these scans offer a breakout signal for immediate entry too. An example of using this method is a stock I found early this week using the easy scan above. MVG on Monday made a big volume move of over 5% and now looks like a pole may be forming; I watch it daily and hopefully a flag or other pattern will form at some point. SFLY another example, the easy scan caught the move last week on a move out of a long multi month base on high volume and price percentage spike, now forming a little congestion pattern that may evolve into a flag or something else.
BTW, stumbling on them scrolling through watchlists is how I find some too, and I think it's a great technique as it keeps you sharp on pattern recognition because it forces you to look at many charts and patterns and trains your eye.
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fpetry
Thanks for your description of how you find dragons. I put it into an indicator in a chart template and use
to sort a watch list. For me it is easer to edit that way if it becomes necessary.
In it you mention that it sometimes gives an immediate buy signal. Could you tell me how you generate
buy signals?
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Joined: 7/23/2010
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David, Stockbee has a tremendous understanding of how to use the pcf language. His pcf's alone are well worth the years subscription imho.
I also subscribe to Dan Fitzpatrick's nightly video free mailout. Have been for a long time.
But Wordens, in their wisdom, did a video the other day Webinar: Trading in the Lame Duck Session (see home page) with Dan teaching.
If you were to watch that video then plug in his pcf's below the video, then setup your BB 20,20 one could almost grab any number of BB/dragon breakouts his budjet could handle each day.
Be sure to subscribe to his nightly free video's . The BB Squeeze are his baby and he sure does understand how to use em. And doesn't hesitate to teach those who will listen. I think his subscription would be well worth the investment.
Here's last nights for an example www.stockmarketmentor.com/public/2797.cfm.
BTW I gleaned from fpetry method. Good stuff.
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BTW! I shared a chart. Search alindsley. The top result is "DanFitzpatricks 2BBSqueeze scans converted by Bruce". I asked Bruce to convert Dan's scans. They worked perfectly for me. That link is below. Scroll midway down in that forum if interested:
To read the message, open the following link in your browser: <http://forums.worden.com/Default.aspx?g=posts&t=49571#209509>
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Thanks Art, much appreciated.
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ur wlcm. Hope there is something in there that helps
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