‘Picking’ The Right Spot
Pattern consolidations often
‘strike a chord’ with traders looking for breakout plays.
The Slim Jim, a lateral congestion pattern, is typical action that a stock might
produce before the producing the breakout trigger above pattern resistance.
One way that a trader can trade the consolidation
is by looking at multiple time frames for confirmation. I particularly like to
watch for these types of setups in growth stock candidates as the issue carves
out a nice weekly base. Stocks that qualify as intermediate-term basing
candidates are especially compelling for a couple of reasons: First, these
issues have the background evidence in the form of technicals and fundamentals
to give investors something to sing about. Secondly, many of these stocks also
have a much smaller float available. Essentially, what this means for the quick
and ready trader is ‘getting in the door to the store’, before the rest of the
crowd waiting outside. The result is usually, at a minimum, a nice intraday play
within the larger consolidation.
In today’s trade, Guitar Center had all of these
qualities.
09:52:30
Ahead Of The Curve
Guitar Center (GTRC)
has been consolidating on the 30-minute extended chart for the past week (see
attached). The bigger, daily picture has this consolidation action taking
place within a 2.5 month
Slim Jim consolidation. Triggers for potential longs out of the smaller
pattern might be considered above 34.50. GTRC is up .16 at 34.13.
cat
Maybe the next time you see something like this,
you can be one of the first to pick it up and finish off by singing your own
version of ‘Walking On Sunshine’, before investors belt out another tune,
‘Here Comes The Rain Again.’