Bulkowski's Vulcan Materials (VMC) Quiz

Look for the following chart patterns (If you find others, great!): 2 rectangle tops, Adam & Adam double bottom, ascending triangle, descending triangle, triple top, inverted and ascending scallop, and a broadening top.

Price has touched the bottom trendline of a broadening top at points 2 and 3, making a partial rise (P). Partial rises usually predict an immediate downward breakout, but not this time. Let's assume you spot the broadening pattern today, as shown.

Question 1: Do you buy, short, or avoid trading this stock?

Question 2: If trading this one, what is the target price?

Question 3: If trading this one, what is the stop price?

Answer 1 (buy?): Buy. When price touches the bottom trendline for the third time, buy. Price might rise up and curl back down in a partial rise, so watch for that. If that happens and price drops below the trendline then sell. If it touches the top trendline and begins heading down, sell.

Answer 2 (target?): Measure the height of the broadening top from highest peak to lowest valley and add it to the price of the highest peak. The result is the target. Look for round numbers (10, 15, 20) and overhead resistance to gauge how far price will rise. In this example, the high is at 42.99, the low is 39.17 giving a height of 3.82. Adding the height to the high price gives a target of 46.81.

Answer 3 (stop?): A good stop location is below the trendline, providing the decline does not represent a large loss. In this example, there is a congestion region in August (circled). It corresponds to the broadening top low. I would feel safe at placing a stop below the broadening top low but by a few cents, call it 39.13.

Price has reached the target price after a swift move up at the broadening top's breakout. Through October and into November, price moved horizontally before climbing to a new high. For the last 3 days, price has dropped.

Question: Is it time to sell?

Price gapped up and then hit overhead resistance at the round number 50, forming an inverted roof pattern. Don't go searching the planet for that chart pattern. It's rare. Price has broken out downward from the roof.

Question: Is it time to sell?

If you didn't sell at the inverted roof, you have another chance now. Do you see it? Find the reason why it's a good time to dump the stock.

A broadening bottom pattern appears which signals a sale, as shown.