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Hey all: I have rarely caught a short stroke in my own chart reading and would appreciate any one's opinion on whether the pattern marked up above represents a valid short stroke pattern in ASCG. I note the volume is lighter in the 2nd week (as it should be) but debate whether the second week's close is tight enough relative to the first week's to allow for a legitamate short stroke call. Any thoughts? Are there well defined quantitative "rules" for the moves in the first and second weeks? Thnx in advance! Brad
when I researched IBD for the so called exact qualifications for a short stroke pattern, I recall that, in one explanation, the maximum range for the week had to be "less than 4 to 5%". this one would fit that range, although at over 4%, ones like this don't have the look that I'm used to. the first week is strong enough for the set up.
Thanks wbrandon! Last time I searched Investors.com, I did not find quantitative metrics for defining a valid short stroke. I believe it was FFIV which they used as an example. I'll do some more research and see if I can't find an answer to my queriy. When you say max range of 4-5% are you referring to the 1st or 2nd week? Brad
You'll find that there are often times when you'll need the refresher. In this particular case, you may find what you need at: www.investors.com/.../searchresults.aspx(Content%20Type:Education/Help,Education/Help%20Type:Investor's%20Corner)
Hope this helps,
NIce timing!!! IBD Stock Analysis for this Monday, 4/16/12 shows FIRE as a short stroke example and it has a 6% range in the short stroke week. They allow a little more range in this one so they are obviously flexible.
I think you want the volume to dry up in the second week. Look at RIMM 01/02/2004. I also think it works better if it forms in one of the leading stocks in it's Industry, Like LULU in this case.
Thanks all for a great discussion! Tom, the link you provided failed; not sure why. I rec'd a note from IBD re: short stroke. I asked for any aauilable quantitative measures (e.g., % of price change in large upweek spread, "tightness" of second week's close relative to first, etc...) but they provided none. This suggests to me that exact quant. measurements aren't that significant in judging whether a pattern is a valid short stroke. Important ponts I did take from their repsonse were: 1) the second week price change should be fairly minimal compared to the first and volume should be lighter, as miamorekarina said, (i.e., institutions aren't selling in the 2nd week) & 2) it is a secondary buy point so keep purchases on the small side (aim to keep your cost average 20-30% below the current stock price). Hope that helps. Brad
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