The letters R-H-T.  That’s right, $RHT.

Out of respect for “The Fly” and members of The PPT, I am not going to reveal any of $RHT’s quantitative metrics, but you can read my posts here and here to get an idea for the basis of my rationale.  Suffice it to say, this stock has provided very reliable performance over the past year when it enters an OVERSOLD cycle.

Again, I need to emphasize that I use The PPT as a tool to synthesize information into a usable list of stocks that I could potentially take a position in.  Just because a stock shows up on my list and has a very favorable ‘algorithmic history’ doesn’t mean that I’ll throw money at it and expect to get rich.  Of primary importance to me is that I can recognize and interpret the pattern a stock is making.

That brings us to $RHT.  Let’s take a look at a 3 month daily chart:

You can see from my deft MS Paint work what I think is going to happen next.  This is one of my favorite patterns to trade…what I like to call the “orderly pullback”.  Sure, there are probably other names for this pattern (i.e. bull flag, etc), but I don’t really pay much attention to TA terminology, so excuse my ignorance in that regard.

Anyway, my objective here is to combine a pattern that I have been able to successfully trade in the past with the quantitative power of The PPT.

Lastly, a word of caution.  I do not plan on entering into this trade immediately as I still expect to see a little more downside.  Depending on the severity and nature of the decline, I would be able to enter this trade with even more conviction.  Right now, what I (ironically) really don’t want to see is an immediate sharp move higher, as I’ll be left in the dust.

Most importantly, to manage risk, I would place my stop at 56.5 (which served as resistance prior to early August).

My best to you all.

-EM

UPDATE: The open is pretty much exactly what I wanted to see happen with this stock.  I’m going to wait until the dust settles from Amateur Hour and reassess where we are at that point.

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