Bulkowski's Apache Trading Quiz

B and Eve is an Eve & Eve double top. The measured move is ABCD and it follows the same stair-step pattern as the prior up moves. That's a warning as a pattern so blatant tends to break apart just after you buy in.

Price has gapped upward out of the flag and consolidated.

Here's my notebook entry for the buy.

Here's my notebook entry:

"Date: 21 July 2005. Trade time: market open. Filled at: 67.75.

"Sell reason: This looks to be making a head-and-shoulders top. Other stocks in the industry are showing weakness by having bearish patterns. It's time to try to limit the loss and get out. Since the price made a higher high by 16 cents today, I just added that to today's price and placed a limit order, day, to sell at 67.56. My guess is that the stock will make a lower low tomorrow, signaling a downward breakout from the H&S [head-and-shoulders] top. That would not be good...This stock hasn't performed as I expected almost from day one. It's time to get out. The stock was upgraded by a broker and it sold at the open."

What I should have done is gauge where the stock was headed and THEN sold. The gap up on strength may have given me enough backbone to stay in the trade longer.

But that's the danger. If I held on when I thought I should sell and either made more money or lost less, I would be more prone to NOT sell the next time, hoping the stock would move even higher. That's a recipe for disaster. I guess what I'm saying is that the stock needed to be sold but not by using a market order on the open. Trade it intraday day and sell instead of at the open.