A BUY Pattern gave a buy signal on 9/11/2008. Entry price would have been $95.87. The target price is $97.20. Close the position at or above that price.
For those who need a little bit of an explanation of a Jeanty Buy pattern, take a look at http://www.wikinvest.com/image/LUV_BUY.jpg and you should be able to see all the components of the pattern.
Now take a look at the pattern:
This is not the most picture perfect example of a Jeanty Buy Pattern, but all the components are there:
1) The downward move shown in the red rectangle from $108.99 to $97.20
2) Retracements showing at first resistance at the 38% retracement level and then later more resistance at the 62% retracement level. Only one of those would have been enough to form evidence of component #2
3) A resumption of the original downward trend until 9/11/08
4) A bounce off the 38% extension level of $92.70 on 9/11/08. On that day, the low reached $92.16 and then we closed at $95.87 That bounce was a bit of a "hard" bounce as it took quite a bit of our potential gain.
Since all the components are present, we have a Buy signal with a target price computed as the bottom of the red rectangle, at $97.20. Assuming we entered the position at the closing price of 9/11/08 of $95.87 this gives us a potential gain of $1.33 or of 1.39%
So, what happened?
We hit our target price on 9/19/08. Some of you might look at the picture and say, "Wait a minute, looking at the chart, it looks like we hit the target on 9/12/08. However, closer observation shows that on 9/12/08, the high for BEN was $97.12, or 8 pennies below the target price. This would not have triggered our limit order and we would still have been in the stock. But, on 9/19/08 we had an incredible gap and opened at $106.26. This was well above our target price and we would have closed the position (through our limit order) for a gain of $10.39 or 10.84% in 9 days!
For more Jeanty pattern signals, look at some of the predictions I made for GOOG, EMR, COL, BDX
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