Capstone Turbine Corp. [[CPST]]Â broke out of a six-month base in early December, 2007. Volume was ~4x the average of the previous 4 months.
- The huge run after the breakout lasted for a month. CPST pulled back on decreasing volume, testing the 200 day average in January. The stock also bounced from the tip of the triangle, which it broke out from 1.5 months prior.
- For the first half of February, the stock consolidated gains. A Bollinger Band, Average True Range, or NR7 system would probably have screened the stock during this time. It is easy to see the triangle forming, with volatility and volume decreasing.
- On February 25, Capstone Announces New Distributor Agreement for Ecuador. Whether it was this news or the volatility squeeze, it is hard to say, but the stock breaks out on an increase in volume.
- Throughout March, CPST consolidates on support from the January high, eventually bouncing off the trendline established from the January low.
- This bounce leads to a +40% run.
- In late April, CPST pulls back, and for a brief moment RSI(2) < 10. For the rest of April and early May, the stock consolidates within a triangle continuation pattern. Volume increases as the stock moves up.
- Today Merriman initiated coverage with a Buy. Volume swelled, and the stock has plainly cleared the triangle continuation pattern.
 Would you buy this stock, on Tuesday?
Would you wait? If so, for what?
My guess:
1 week of retracement, with a net move to the upside across the next few months.
A friend of mine owns a large position in the bowser. I hope it trades to zero, or close to it.
Bowser? Dog?
showed up on my screener but I passed it due to the egregiously speculative nature. However I do think it will trade higher.
Buy with a stop below the triangle. It may not retrace for quite awhile.
The ideal entry would be a pull back to the MA 50, but it could double, triple or more before actually doing so.
It is a highly speculative stock with enormous volume, so the normal rules may not apply right ow.
Bought this stock last Oct. @$1.12. Mentioned it a month or so ago to GreenWriter in one of his posts. He also thought the chart looked good at thjat time. As it traded recently in the $2.75–$2.95 range I watched it waiting to add more on a pullback to $2.60. Missed it, and now I’m kicking myself.
Check out the company itself in addition to the chart. They make microturbines. Alternative and GREEN energy play. The right kind of product at the right time. Cramer pumped this stock about 3 years when it was $5ish. It went up to like $7.50 before a long slide down and an eventual management change. I’ve listened to the last several CC’s, and it sounds to me like they are getting it right–good possibility of being cas flow positive by eoy.
Bowser?? Fly, would you please clarify?
Speculative? Well sure, but then again I don’t see a lot of posts on this site recommending nothing more risky than Berkshire-Hathaway.
Do not now know when, but it is my intention to add another 10k to my position. But then you should know I bought my first batch of MVIS in the high $7’s long before Fly got involved.
I would not diminish the royal status of canines with the nickname “bowser” for this steaming turd.
It is a turd.
Moist.
Hot.
A-steam.
Fundamentally it may be a turd, but who cares about fundies?
Jake, why say you this?
Was that me or Yoda asking? (I asked myself).
Brush and Dog — CPST is the ultimate all promise, no deliver company. Something always over the horizon, delivery date uncertain.
Reminds me of a certain teeny tiny projector company….
Shed,
How do you size your position on an RSI(2) buy? Where do you set your initial stop? Do you even have a stop? Do you endure unlimited pain due to the edge you get from following the signals over time?
Prospectus-
I’ve been testing with a 15% stop loss. Over the past 1 year and 10 months, and over 100 trades, it has been hit 4 times.
I’m considering another stop that would hit if RSI(2) rises back above x (maybe 40-50) and then reverses and again closes below 10.
However, it is amazing that most of the time, when RSI(2) gets back above 80, even after a month or so of being in the trade, most of the losing trades will get back near breakeven, but there will be some pain to endure.
Position sizing: I’ve been testing on a 100K account, where every position is 1/3, with a max of 3 positions at any time.
Again, the testing is in its early stages. Position sizing is something that will need to be considered in the future.
Looking at your Google Docs sheet, 12% is best for the historical data you have. Trades that get below that end up costing you more than you gain by letting them ride, and a stop smaller than 12% causes you to take too many 12% losses that would be smaller than that once you get to RSI(2) above 80. Historical curve-fitting, yes, but it’s better than a WAG (wild-ass guess) I suppose.
Are you trading this live now, or still just testing?
Prospectus, I’ll re run the test with 12% and get back to you tonight. Is the email you provide in the comments a good address?
I am, for the most part, trading it live, except I am not committing 1/3 of my capital to each position. I have a Tradestation account funded with 50K that I plan to use. Once that is up and running, it will trade full positions.
Right now, I am using what is not in long positions from my remaining 50K in Scottrade to trade with. The only position I have on right now is a DDM, 100 shares. I would have bought more, but I am not going to use any margin on this until the testing is complete.
Yep, you can email me there