In this week’s webinar, “Technical Analysis: Base Stage Counting,” the MarketSmith team went over a key technical aspect of growth investing that can help you analyze a stock’s price move and potential for future growth.

Counting how many bases a stock has formed on its current uptrend is an important part of technical analysis. By counting bases, we are able to track price progression and measure the age of a price move. We’re also able to assess the remaining potential for the stock, since we know that most price moves are three to four bases long.

When looking for stocks to buy, we prefer early stage bases, since this could potentially be early on in a stock’s run. Late-stage patterns have a higher risk of failed breakouts.

If a stock’s price undercuts the lowest point of the previous base formed (see chart), the stage count resets. Resetting the base count can be a positive occurrence as a new stage count can prolong the uptrend.

If you have any questions, you can reach us at (800)424-9033 or at reachus@marketsmith.com.

Best returns,

 

The MarketSmith Team