The following stocks represent over a month’s worth of High Tight Flags. I first started working on the screen on April 13th. The blue arrow identifies the evening they were screened. I have posted them for review in order to improve the screen and to start to think about exit strategies as well as stops. Comments/thoughts are welcome and encouraged.
In Part 2 I will post some thoughts and some statistics generated from a simple trading system built to trade the High Tight Flag setup.
Look for Part 2 soon…
Looks like most would have made money if you got out in time. Maybe some kind of simple trailing stop for the exit?
Yep. Trailing stop is what I’m thinking.
What’s the criteria for being considered a high tight flag in the first place? I’m just having trouble viewing some of them as that, in relation to the others that look so obviously like high tight flags, if that makes sense.
That’s not meant to be a stupid question. Sorry if it is, anyway.
$TZOO Mar-Apr 18th is a sweet HTF which exploded to the upside, however where you identify a 2nd HTF in it looks suspect to me.
For right now $GLBC looks great, but then again I am biased towards the 18-30 range, well above the average, tight features, and a several openings for smooth entry.
Chanci, for the criteria, look here: http://thepatternsite.com/htf.html and look here: http://thepatternsite.com/HTFStudy.html
The screen is based on those qualifications. I have most of it coded exactly has Bulkowski describes, except I have not added any requirements for slope. I do have requirements for the > 90% move in 44 days or less and a range of less than 30% after the top is made. I have not coded in any way to measure whether the flag is tight or not. I do want to work more on that aspect.
Thanks!
The performance of any stock must be considered in relation to general market conditions…and it’s been a tough month, so, IMO, it’s hard to draw many meaningful conclusions.
Agreud.
A lot of great shorting opportunities in there on failed breakouts
Cheese, that’s what really jumped out at me!
But what do you consider a failed breakout? Looks like a lot of them haven’t really formed a flag yet?
From Bulkowski, re: the flag.
“Shape: A consolidation pattern forms after price doubles. It usually doesn’t look like a flag or a pennant, just a pause in the price rise.”
IBD gets more definitive…
“”A high, tight flag starts with a flagpole: a 100% or more run-up in four to eight weeks. It shapes a flag with a discreet pullback, typically 10% to 20% in [b] three to five weeks.[/b]
It is a high-risk pattern , a stock that has already soared 100% or more can be packed full of investors set to take gains. That’s why you must make sure to wait for shares to pass the buy point, a dime above the left-side high,[b] in better than 40% trade.[/b]
HTML tags don’t work here? I tried to bold print the important words on my previous posts. And where did the 3 minute edit function go??
Link for the rest of the IBD HTF definition story with examples..
http://finance.yahoo.com/news/A-Connoisseurs-Base-The-High-ibd-2089184513.html?x=0&.v=1
Thanks Dave. I’ll check it out.
$GLBC winner
I’m seeing a lot of biotech in there – at least 9 of those 23 stocks, just by glancing at the names. The presence of flags isn’t surprising given biotechs’ tendency to pop (or implode) on a fundamental catalyst with nearly no warning, and then to consolidate as existing holders either take profits and/or reduce risk.
Whether that’s got predictive value is an interesting exercise: in the case of FDA advisory committee meetings, there’s another fundamental catalyst (approval/denial) within a month. In the case of clinical study results, there’s often more than one study underway, with no hard and fast rule on when its results come in. After the last of the studies, the next regulatory catalyst (NDA submittal and decision 6-9 months later) is several months away, and it’s always a coin toss as to whether there’ll be a secondary offering in the interim.
Hey Wood,
to tighten up the flag, try using bollinger band width based on a look back period stochastic. For my breakout setups Id use a bollinger band width in the bottom decile based on a 200 day look back period.
For exits a lowest low of X days stop and ATR ratchet for profits would probably work well.
Happy Trading
Thanks Ripe.
One thing I’ve done is to code in the range that develops after the high is made. I can tighten the allowable range and the flags will get better looking. However, it limits selection. Right now I have the allowable range at 30% from the highest high to the lowest low, per Bulkowski. If the lowest low exceeds 30%, then it is no longer counted as a HTF.
great stuff — as always! i look forward to the analysis.
VRUS on the verge of a flag B/O
IPGP on the verge of a breakout of a HTF. Might not qualify as it was a little long in the making.
This sentence is a test.