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First I need to note that ABIO was chart number 3 of 600 on my list. That's a bookmark, in case I need to re-start my charting program. Now I seem to remember there was another interesting chart a few charts later. The truth is, I should be sorting all the charts into separate lists, or books, as I do this writing, so I won't have to go over the list again and again. Numbers 1 and 2 were both steadily down for a year, and I discussed how I want to handle those. But, I'm impatient. Let's see what's next, and maybe before I go further than that I'll see what I can do about the other chart types.


The "pattern" recorded here is the dip to $1.60 in December, which was followed by an instant recovery, and then something shaped like a kind of hook, maybe, which I see again and again, that hook shape ... and, in this instance, there followed a somewhat notable rally.

As usual there are assorted things we could look at. One would be asking how we could have know where the rally was going to top out. There are places to look for clues, in the past, but also clues can develop. A rally of this sort produces broad green bars. Well, the green color is a function of the type of chart, but these are days when the price started low and ended considerably higher, and then, if we look at these examples, most of the bar is above the previous day's bar. Furthermore, there were three such bars made before the price reached $2.40, and the bar that crossed that line was of the same type, but in the case of the first three examples, the next bar stayed high up relative to the big green bar, while, in the case of the final example the next bar sent a long tail all the way down to almost the bottom of the big green bar. That turned out to signal the top.

I see this making a second, bigger hook, now, so I'm predicting a rally to something like $3, in two or three months. You might note the theme that's developing, which is the notion that small patterns are followed by larger images of themselves. You might also note that this chart only predicts a 50% gain, where ABIO predicted a 100% gain, speaking now about what I think is going to happen during the rest of 2015. Hmm. Maybe I'm selling the pattern short. Measuring off the hook, the rally in February carried quite far. Well, we'll see. I feel silly, launching right into predictions this way, but I can't help myself. By the way, this is number 6 out of 600.

11

I ended up making a prediction. That made me very anxious. Well, maybe I didn't overtly make a prediction. The thing is, I got excited. I want so much to buy some shares, right now! What is the proper way to handle this?

Well, for one thing, I'm lucky. I don't have any cash to invest. I could sell some shares - I own stocks worth several thousand dollars - but they are all stocks I want to hold on to. I'm excited, but, in effect, not tempted.

I did suggest, in fairly explicit terms, not buying these stocks. Well, I said not to put a lot of money into them. If I were putting money into ABIO, I would be planning to invest one hundred dollars. The larger plan would be to invest $100 in each of quite a number of stocks. I want to emphasize that this is not a very practical plan. You would need to keep an eye on each of those stocks, which would definitely be a chore. Ideally, you would develop some sort of system for tracking your positions. Writing about this is making me think about these things, which is interesting. I think I might write about that more.

ABIO has been making a series of rising spikes. There were three in February alone, one to two weeks from each other, then one in March and one a month later in April, and then one three months later in July, so the time elapsed between them is growing. The shape of the July spike and its surrounding lower prices is consistent with the shapes of the other spikes. The whole pattern makes me expect more off the same kind of thing. Maybe in 9 months ABIO will make another top a bit above the level of the July top. Also, in March ABIO made a top, then pulled back in a set of small waves, steeply descending, then made a bigger wave, and another low price, and even after that it made a top and pulled back for a time, and to a fairly low level, before completing the rally to the April top. Maybe something similar is developing now. Maybe - here's my guess - a price of as low as 90 cents is coming, and then a rally to something like $1.25, then more low prices, then a rally to $1.40, then low prices again, and this would now be, say, six months from now, and then a rally to somewhere near two dollars a share.

This looks very convincing. I feel quite confident about it. And yet, I would be very wary of putting more than a little money in. Let's see. Now, if you are calculating the return you can expect from a trade, you calculate the gross return, and then you subtract the commission. If I could buy 100 shares at 90 cents, and for ninety dollars plus $10 commission ($8, really), and then sell at $1.25, my profit would end up being $15, which is, of course, very small potatoes, although it's 15%, and I would achieve that in a matter of days, or weeks at most, so it's actually a good rate of return.

Now, listen, if I were to put in one thousand dollars, or, let's say, $900, then my return would be $325, after expenses, and that's a 30% return, so the commission has a big effect on the smaller trade. But putting in $1000 would make me very nervous, or it would at least be against my principles. I can't really say more about what to do or not do, here. Let's try to look at more examples, and see where it takes us.

chart 1

So, ABIO tumbled downward, like a bubbling brook, into December 2014, and then it splashed upward nearly 100% in three big days. Then it "returned to its December bottom" at a more or less measured rate by late January. That's the pattern, and from the bottom price of .70 it doubled within six months.

Really, there are numbers of spiky tops in this chart. I feel like something could be learned from each of them. Try comparing the pattern in March to the larger pattern that's developing now, the pattern of June and July.

9

And even if the charts I post do make a compelling case for trading chart patterns, you should be wary. Think about it this way: you may see evidence that certain pattern predict rather rapid doubles. If that's in fact true, then you should be able to start with quite a small amount invested, really, an inconsequential amount, a frivolous amount, and soon build it into a massive fortune, or a small fortune, at any rate. You should not, this is to say, think that success with trading chart patterns depends on any kind of substantial starting capital. Quite the opposite. And you very probably should pointedly not start with a large amount of money, because that would set you up for a possible big loss.

It's true that, if the system doesn't work very well, you will not make money with a small amount invested. The charts I post might give some indication as to whether it's worth your trouble to put a small amount of money into trading. Even if this evidence ends up looking quite good, I rather hope you will not rely on it entirely. One way to diversify is to use more than one system, and the traditional approach - you could call it that - is described in certain places, and, really, in many places, and I'll discuss those when I get around to posting on investing. If you're not sure, put most of your savings into insured accounts. That's not really where you should keep your money, but safety is of paramount importance. Safety First!

8

By "now" I mean shortly. First I want to say that the charts I'm posting here are "fixed" charts from a certain point in time, in short, an actual historical record, even though they come from a web site that specializes in showing people "the latest" on the stock market. It so happens that that site, Finviz.com, does offer these fixed charts, for publication in blogs and on web pages. These are "embeddable" charts, so they are "served by" Finviz, when you load a post. I think it's pretty amazing that Finviz offers that service. I don't quite know what to say. I'm not really a Finviz customer. Pretty much I just use their site to get these charts. They offer a variety of tools, but I don't quite know what to make of them. If Finviz is listening, perhaps that would interest them. Anyway, I'm grateful they let me publish the charts. Hopefully they'll continue to do so.

The other thing is, my disclaimer. You may have heard the truism that most traders loose money. I'm basically living proof of that. I'm not telling you how to trade, here, I'm trying to figure it out myself, and I'm showing you how I'm going about it. It's true, I've had some successes, recently, but I'm not getting the kind of reliable results that would define overall success. Really, unless the charts I post going forward make quite a compelling case, you might want to avoid trading. It does seem to me that investing in stocks is important for, say, a working person who wants to retire under prosperous circumstances. I've seen some convincing advice on how to do that. I suppose I should say something about that, but I'm impatient to look at charts. Look for a post some time later that I'll title "investing".

7

My thought is that there are charts which show what could be called a more complete kind of pattern followed by an event. In fact, I described such a pattern earlier, and the reason I described that kind of pattern was that I know one of the charts near the top of my list illustrates just such a pattern. Shortly, I'm going to post that chart. I need to discuss its meaning, though, and I'll try to do that before I start posting charts.

Basically, looking at that chart, I see a distinctive pattern, followed by an attractive kind of action. Now it's possible the attractiveness of the following action is affecting my mind - prices went up nicely, and I want to see patterns that are followed by just that kind of event - but still, I feel I would have been interested in the pattern that developed before that rally, if I had been looking at it as it developed.

The thing is, even if the pattern that preceded the rally was in fact distinct and identifiable, the one example proves nothing. What might provide some useful evidence is if I can identify a number of examples of that kind of pattern, each followed in the chart by subsequent events.

Now I'm going to start posting charts, and we'll see how it goes.

6

Here, though, on this blog, my purpose is a bit different, and it relies on a third type of chart I see fairly often. This kind of chart shows a pattern of some sort, and it also shows some event or sequence of events that occurred after that pattern formed. Let me define my terms. A steady one year decline is a kind of pattern, but that pattern by definition cannot be followed by anything on a one year chart. A steady six or nine month decline, it is true, could be followed by something, by an event, and that event could be visible on a one year chart, together with the six or nine month decline.

This means I might be able to collect some examples of steady declines followed by some kind of event. A steady decline could arguably be followed by one of three types of events: an advance, a decline, or a period of sideways action. I might be able to collect, here, examples of steady declines followed by some or all of those.

Realistically, though, it's probably not that simple. I'm likely to find all sorts of things after steady declines, and then there's this: as events develop after a steady decline, it could become increasingly difficult to say, with confidence, that a given pattern, which occupies the first half or two thirds of a chart, would have been visibly a steady decline, on a one year chart.