For some reason I have always liked longer term stock charts. It is true that a long term stock chart does not give any satisfication of a quick trade or instant gratification. Instead what it does offer, is a big picture view and maybe some degree of longer term confidence in the true trend of a stock or index.
That is why I like them so much. Because it helps me to see with higher probability where a stock or index is actually going so that if I do make a shorter term or intermediate term trade, I know that there is a pretty good chance I have the wind at my back.
And so, here is a little gem I discovered a few minutes ago while browsing through my charting software. I just downloaded over 10,000 stocks into my charting program going all the way back to 1980. It took many hours, and I was quite frankly surprised how long it took considering that my computer system is ‘pretty up to date’ in terms of processor speed.
Anyway, the stock is Health Management HMA. Below is the quarterly price bar chart .
The most striking thing about this chart is that there appears to be a very large ascending triangle formation since 1998. Its huge, no other way to describe it. This is good because it indicates that a lot of cause has been built up waiting to be used. Ascending triangle patterns are pretty reliable patterns in my experience. More so than symmetrical triangles.
The real juicy story with this HMA chart however is the volume story. Volume, so often neglected in stock analysis is something quite important in this chart because it provides a useful hint about where HMA will likely be going in addition to the evidence revealed from the ascending triangle pattern. The two pieces of evidence combined provide a fairly high probability of a valid breakout and sustained trend thereafter.
I don’t know how much longer HMA wants to fill into the apex of its ascending triangle, but regardless of this fact, here is another one you should be aware of…
Note the two quarterly swing highs I point out in the chart with the red arrows. The first one was on 40,000,000 shares. The second one was on 125,000,000 shares, an increase of 212% relative to the first swing high. This is extremely important evidence about where this stock will be going.
When a stock tests a previous swing high on equal or greater volume, ultimately, in the majority of cases, that high will eventually be exceeded, even if there are minor pullbacks.
The previous swing high was tested on an enormous increase (percentage wise) in volume. This tells me HMA will eventually break out of this triangle formation in a very big way and power on to new all time highs.
Stay tuned to Trading Top 100 through your klipfolio for updates on this story.
Thomas