Bulkowski's Pogo Producing Trading Quiz

There's not much to look at here. The diamond top is questionable (please forgive the way it's drawn). The head-and-shoulders could also be a symmetrical triangle if you connect the head and right shoulder with a trendline.

From my notebook: "Date placed: 12/3/05, Saturday. Stop order to buy at 50.53, good-till-canceled, above round number 50.50, filled at 50.54. Volatility stop at 47.06, placed 12/5/05. Upside target: 56, site of congestion in Sept (circled in green). Indicators: Bollinger bands are narrowing. Overhead resistance at 53 (red line) setup by bottoms (circled).

Buy reason: Head-and-shoulders bottom. A big W pattern begins from the highest peak on the chart and reverses at the head-and-shoulders bottom. Oil has retraced 50% of the up move from the May 2005 low and Sept high. It looks poised to move higher. As I was researching this, I found lots of negative about the company. Nothing specific, but the stock might move down from here."

My hope was a rise back to the top of the Big W, about 60.

"Score target: 64.18" is from my Trading Classic Chart Patterns book where it scores a chart pattern for performance. This one scored -1 with a median rise to 64.18. The negative score means it was unlikely (but not impossible) to reach the target. Usually I avoid trading chart patterns with scores below 0. Then tend to fail just as the numbers suggest.

Industry and company ranks are a relative strength test of the stock's performance over the past 6 months, grouped by industry and ranked. The stock ranked 17 out of 46 industries and dead last 8 out of 8 among petroleum producers.

This is a picture of the S&P 500 index. "Future market direction: Up. The S&P has paused after a run up from the October 2005 lows. It's gathering strength now." I circle the pause region. After I bought, the index moved horizontally for a month and then began a choppy move to higher ground.

This is divergence between the commodity channel index (CCI) indicator and price. It's a complicated screen with the top half showing buy (green) and red (sell) signals. I show divergence by the thick blue line. CCI/DCCI signals occur when the two cross or the CCI crosses the 0 line. I use it mostly for divergence. The DCCI is a "delayed CCI" line, a moving average of the CCI line.

"12/9/05. Stop raised to 48.78, just below the right shoulder low. 12/12/05. Stop raised to 49.63, below volatility stop and below Fibonacci retrace as price makes a new high but closes much lower. I want to narrow the possible loss."

I show the 12/9 stop as the red lines on the day (second bar from the right) and price level. The inset shows the Fibonacci retrace of the move from A to B and the 12/12 stop location (approximate).

"Date sold: 12/19/05, at: 49.59. Sell reason: hit stop."

I took a small loss when price threw back to the base of the chart pattern and took me out in the process. Price did go on to complete the Big W chart pattern, pushing through overhead resistance at 53 and 56. Too bad I wasn't in the stock at that time..."