Choice, Bio-Chemical Reaction
Even though biotechs have been beaten down, the group is
large enough that there are patterns setting up in some stocks with good
performance records. Bio Chem Pharmaceuticals
(
BCHE |
Quote |
Chart |
News |
PowerRating), a stock with
acceptable three-, six-, and 12-month RS readings greater than 84, is setting up
in a classic Slim Jim-style formation.Â
Although these patterns are most
appropriate to the 5-minute time frame, Kevin Haggerty points out in Marder and
Dupee’s The Best: Conversations With Top Traders and in TM’s Guide to Conquering
The Trading Markets (both available on TradersGalleria), that Slim Jims can occur
in any time frame. In fact, Haggerty says, “If I could trade just one
pattern, it would be the Slim Jim.”
The long pattern is a consolidation of eight or more bars
on a high. (Short setups generally occur on a consolidation on the low). The
strategy is to go long on a breakout of the Slim Jim pattern and place a
protective stop just below the bottom of the pattern. BCHE is issuing confirming
signals of a breakout of a daily Slim Jim by logging four consecutive higher closes, but is still
not over-stretched, up 5/16 to 35 3/8.
Another choice pattern setup is being etched by Choice
Hotels
(
CHH |
Quote |
Chart |
News |
PowerRating). Although this is not generally a go-go sector, CHH is setting up
in a classic cup-and-handle pattern and volume on this thinly traded stock has
increased on recent days as much as tenfold without a decline out of the
handle, implying the volume could be position building rather than selling at a
10-month high. CHH is up .33 to 14.98.
Â