One of my most powerful trading signals is the Holy Grail.
This is a pullback to the rising 20 day moving average (it also oftentimes plays out on the hourlies).
Strongly trending stocks, even those in runaway moves such as EH, walk off their overbought condition by pulling back or moving sideways.
The following daily EH for this year shows a low at 20.21 on January 4 and a high of 99.98 just 14 trading days later.
It’s a bull market.
If you were long throughout that 5 bagger 3 week rocket ride, you have to struggle with where you trim.
Do you take partials at a 3 bagger, a 4 bagger or sell the entire position once it doubled in just 7 days?
How does one determine when a Runaway Move has seen a Buying Climax or whether the train is just getting going?
The answer is observation of the price action.
Speculation is observation, pure and experiential; thinking isn’t necessary and often just gets us into trouble.
Timing is everything, but pinpoint timing is better.
There is ONE tool that allows you to pinpoint when to buy weakness and sell strength… and, importantly, when a stock is screaming that it wants to go higher.
It is the only tool on the planet that telegraphs such valuable information.
It is my Square of 9 Wheel of Time & Price.
Of course, it’s not a Ouija Board. But it is the real market algorithm
It requires one to observe the behavior when time and price meet or square-out.
Allow me to explain.
W.D. Gann was the first to recognize the unique market synergies between time and price.
He wrote when time and price square-out, expect a change in trend.
He stopped short, not saying that while every important high and low is a square-out, not all square-outs are important highs or lows.
Speculation is observation. Observation of price and time behavior.
Case in point.
On the Square of 9 below I anchor “zero” to 20.21 for the low.
Notice that it is square a price of 99, the high.
Blue is 20 (notice that 71 vectors 20)
Purple is 99
From 99 EH pulled back to tag its 20 day moving average on Tuesday where it was sitting at 71.
Notice that 71 is 2 full squares (of 360 degrees) up from the 20.21 low.
Taken together, the test of the 20 day moving average (Holy Grail) for the first time since high and the 71 square, presented a long setup mid-day Tuesday.
The key to seeing these setups is to have the name on your watch list and to be stalking the intraday behavior.
I don’t screen for setups, whether end of day or intraday. I use my eyes.
There is no substitute for observing a stock's behavior.
In addition, as the setup revealed itself, I saw that EH was in the process of carving out an NR 7 Day on Tuesday
This is the narrowest range in 7 days.
These Volatility Contractions usually see an expansion of volatility within the next few days.
Quandary. Do I wait for the next day for EH to validate the setup by rallying or do I take a position immediately?
Realizing that EH is an explosive name, I opted to take a full position and tweeted the position to members on the Hit & Run Private Twitter Feed.
Subscribers filled at 75.52.
The following 10 min EH for Tuesday shows the immediate explosion from 75.
We locked in a 8.48 gain for 1/3 our position into the initial spike.
Following a Late Day Breakout, we are up 16.61 on the back 2/3.
All in a few hours.
In sum, it’s a blow-off phase in a bull market.
This is when the most amount of money can be made in the least amount of time.
To do so though requires two attributes:
1) To have the flexibility to be more aggressive than usual.
2) And, to reign in that risk quickly as fast markets can turn on a dime, most traders cannot.
Hit & Run.
If you are interesting in trading the high momentum growth glamours we traffic in, now is the time to join Hit & Run Trading.
