A chart setup I look for is the ‘saucer‘ pattern, also called a rounding bottom pattern. Investor's Business Daily's favored cup-with-handle pattern is really just a saucer pattern followed by a brief pullback.
I like to see longer-term saucers, where over several weeks or months the stock's decline tapers off, evolving into a low-volume battle between sellers and buyers producing sideways movement, eventually turning into increased activity on the upside.
In the October 2, 2013 issue of Seasonal Forecaster I focused on Apple's (AAPL) saucer bottom.
AAPL followed through and went on to set new all-time highs. AAPL is now 65% higher than it was when I wrote that article (AAPL had a 7-to-1 stock split along the way).
In the August 29, 2014 issue of Seasonal Forecaster I identified a saucer pattern in Yahoo (YHOO). Thirteen weeks after that article YHOO was up more than 37%.
In the September 9, 2014 issue of Seasonal Forecaster I identified a saucer pattern in Panera Bread (PNRA). Eight weeks later PNRA was up more than 11%.
At first, saucer patterns may not be easy to spot. It is easy to ‘miss the forest for the trees' by looking too closely at stock charts. My advice is to stand up, step back 6 feet (3 feet for investors like myself who lack the eyesight they had in their twenties) and take a glance at a chart. The ‘bigger picture' will be easier to spot. Saucers, and many other patterns, will stand out.
Today's Seasonal Forecaster focuses on a new saucer pattern setup with a good reward-to-risk trade setup. The CEO bought some of the stock in August, and then the company beat estimates and raised guidance in their most recent earnings announcement.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
Copyright (C) 2014 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
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