OTRK has been in a strong uptrend since late June.
Hit & Run members have had several nice trades in it this summer.
On Friday, it pulled back toward its 20 day moving average, setting up my Holy Grail buy strategy.
A pullback to the rising 20 day m.a. does a good job of defining continuation entries as the 20 day smooths one month of price action.
We alerted a buy on the private Hit & Run Twitter feed at 66.91 using a 64.91 two point stop.
In Tuesday’s carnage, OTRK pulled back to 64.93, missing our stop by the slimmest of margins and installing a 1 2 3 Pullback buy setup.
This is a strategy I created in the Hit & Run books in the 1990s.
It is based on the concept that stocks in strong trends typically do not pull back for more than 3 days before continuing in the direction of the underlying trend.
I’ve been trading the financial markets since 1982 and I’ve noticed when a position comes close to getting stopped but doesn’t, oftentimes it is speaking.
OTRK was swearing. On Wednesday, OTRK closed at 80.32.
The takeaway is threefold: OTRK exploded from another 1 2 3 Pullback/Holy Grail combo setup in tandem with a test of a rising trendline.
In my experience, when a cluster of signals/technical come together, it enhances the probabilities of a successful trade.
CRWD
In Friday’s market plunge, CRWD sank, backtesting its breakout point in August.
The August breakout was a powerful Rule of 4 Breakout… a breakout over triple tops.
You don’t see many quadruple tops; usually the 4th time through seals the deal.
Like the 1 2 3 Pullback, market’s tend to play out in 3’s.
So I created the Rule of 4 strategy to capture these moves.
Friday’s pullback to the breakout point coincided with a test of CRWD’s 20 day moving average for a Holy Grail buy setup.
I flagged an alert on the private Hit & Run Twitter feed and members were filled at 119.14.
It was a pain trade, but the risk to reward was there with multiple signals coming together.
On Wednesday, members sold the balance of their shares for a more than $9 gain.
WPM
On Tuesday I noticed silver streamer WPM turning up after undercutting its 50 day moving average.
It looked like a Flush Of the Fifty was on the table.
This was the first test of WPM’s 50 day line since it exploded in June.
As well, it coincided with a test of the August low.
When it became clear that WPM was going to hold session gains, we alerted members to take it long.
We got filled at 52.85.
Putting the pieces together that made WPM a compelling setup was that it looked like the double bottom would propel a breakout above a declining trendline from this year's high.
It did.
MTLS
MTLS has been on my long radar since its August Rule of 4 Breakout.
I missed that. It was not on my radar until after the breakout.
However, members did take it long on the August 28 NR 7 Volatility Contraction Day signal.
This was also a TD buy setup as it was the first turndown on the dailies since its upthrust.
On Wednesday morning, out of the gate, we called an audible on the private Twitter feed to take it long as it was in the 1 2 3 Pullback position.
We were filled at 38.40.
MTLS rocketed to as high as 44.93 within hours.
It’s on to look for the next Hit & Run trade.
Above are 4 examples of how I put the pieces together to pinpoint entries for solid risk to reward setups.
I don’t use any canned heat indicators.
My belief is that all indicators are derived from price and price and volume taken together… so why not go right to the horse's mouth — Mr. Price.
Whether we like it or not, as traders, we’re all in the pattern recognition business –interpreting patterns of accumulation and distribution.
