BCST and the Breakaway gap...Post for The Well-Informed Trader Series
marketgems.com BCST Chart I is the exact chart I posted as part of the watch list on March 16.. when BCST was #1 on that list. and Chart II BCST is the chart today after the breakout
So in my alerts went the price of above 95 3/4 as the 'trigger' of the buy signal.. in the next few trading sessions, BCST retreated but the buy signal remained intact. On Monday morning I noticed that when BCST opened it had 'taken out' the resistance (which is very important)..
BCST did not trigger any buy signal on 16th as is started to drop and lose ground at the outset, On the 17th,18th or 19th..the downtrend continued but this morning....up and away!!! For me this was a replay of DCLK which I also bought after a 14 point gap up and ended up for a total of 52 more points.
DATE CLOSING PRICE OPEN HIGH LOW VOLUME
3/22/1999 116 1/2 98 1/4 117 7/8 98 11,275,000
3/19/1999 85 87 3/4 87 3/4 84 3/16 1,195,300
3/18/1999 87 85 15/16 89 7/8 84 1/2 1,044,400
3/17/1999 87 3/4 89 13/16 90 86 1/2 810,100
3/16/1999 90 1/2 95 7/8 96 89 1,659,700
You see a breakaway gap that comes at the completion of a certain chart formation (in this case it was the cup & handle formation) but it also broke a double top point & figure chart formation that was coming near.
This morning it took out both the Point & Figure double top breakout and triggered the buy signal.. Now it goes without saying that a stock that breaks normally through these two important chart formations is considered to have broken through resistance. But if it takes out these resistance with a BREAKAWAY GAP, you are in a very strong uptrend indeed and strong resistance breakout.
To make it clearer wouldn't you want to buy a stock that has broken out of resistance 2) had a point & figure breakout 3) cup & handle break out by a large margin or would you prefer a stock that slowly through fractions of a point, makes its way through resistance?
This is not a green light to buy on gap ups, I would not buy on a gap up of an earnings plays, or like BVSN today at the end of long term uptrend. There are special circumstances and they have to be judged on a case by case basis. |
