Hi Nishant, I wrote a detailed thread on why I think it can fail. While any setup can fail, but obviously some are more failure prone and some are less.
We were taught to measure base in 2 ways - depth and duration. These are the key factors which differentiates a (1/n)
We were taught to measure base in 2 ways - depth and duration. These are the key factors which differentiates a (1/n)
flat base kind of setup from larger bases like CNH and W Bottom, VCP as pattern etc.
According to WON, a base can qualify for a flat base if it is 4 week long and upto 15% deep. But WON himself says that Flat Bases are weak bases - they work better when they emerge as a (2/n)
According to WON, a base can qualify for a flat base if it is 4 week long and upto 15% deep. But WON himself says that Flat Bases are weak bases - they work better when they emerge as a (2/n)
base on base kind of thing.
Why Flat Bases are weak - think upon it. The answer lies in the Wyckoff's Law of Cause and Effect. Larger the cause, bigger the effect it will produce.
When I started reading WON's book - something which attracted my attention was - the book (3/n)
Why Flat Bases are weak - think upon it. The answer lies in the Wyckoff's Law of Cause and Effect. Larger the cause, bigger the effect it will produce.
When I started reading WON's book - something which attracted my attention was - the book (3/n)
was written with the purpose to make a common man self reliant in investing himself. Hence O'Neil tried to carve rules for everything - and with time, we thought that rules are everything. But this attempt to make trading simplified for common man became a curse for IBD (4/n)
which is swallowing it rapidly.
We, while matching rules for a base, forgot to look at the objective of the base. The core objective of the base is to absorb the supply - to force weak hands to exit a stock and make the next leg of run possible. If the weak hands keep on (5/n)
We, while matching rules for a base, forgot to look at the objective of the base. The core objective of the base is to absorb the supply - to force weak hands to exit a stock and make the next leg of run possible. If the weak hands keep on (5/n)
sitting in the stock, they will keep on selling it as it surges further and make a clean run almost impossible.
Do you think, a base which barely qualifies for a valid base in terms of depth and duration is able to eliminate weak hands? A base which spent 6 weeks in basing (6/n)
Do you think, a base which barely qualifies for a valid base in terms of depth and duration is able to eliminate weak hands? A base which spent 6 weeks in basing (6/n)
and is barely a 15% deep, is it able to absorb the supply accumulated in the 200% advance which happened before? NO! Absolutely NOT!
It looked like a VCP and everyone knew it is forming a VCP. All weak hands which missed the stock last time before 200% advance is ready to (7/n)
It looked like a VCP and everyone knew it is forming a VCP. All weak hands which missed the stock last time before 200% advance is ready to (7/n)
jump into the stock on first sign of breakout. They are driven by FOMO and things which involves a lot of emotions rarely work.
It is a high time to ditch these rules, they are outdated and prone to failure and traps. We need to go beyond them and think why something (8/n)
It is a high time to ditch these rules, they are outdated and prone to failure and traps. We need to go beyond them and think why something (8/n)
forms and work in they way they work.
Every person we read and follow - whether it is Darvas, O'Neil or Mark Minervini - one common line I found in their works was - they said they needed to think beyond the conventional knowledge. These legends were ahead of their times (9/n)
Every person we read and follow - whether it is Darvas, O'Neil or Mark Minervini - one common line I found in their works was - they said they needed to think beyond the conventional knowledge. These legends were ahead of their times (9/n)
but now as their work became popular, it is now the part of conventional knowledge. We need to build upon this solid foundation we got from our predecessors rather than remaining stuck to what they taught us - it will be the truest tribute to them! (10/n)
Will like to back my point with some charts -
#IEX - Another borderline base with 6 week duration and 17% depth after 116% advance. Qualifies for a picture perfect O'Neil CNH and a Double Bottom Formation. Had a shakeout and a proper handle!
Worked? Check it yourself! (11/n)
#IEX - Another borderline base with 6 week duration and 17% depth after 116% advance. Qualifies for a picture perfect O'Neil CNH and a Double Bottom Formation. Had a shakeout and a proper handle!
Worked? Check it yourself! (11/n)
#FILATEX - 7 week base with 23% depth after 200% advance. Qualifies for a picture perfect High Tight Flag and CNH. Had low cheat and handle.
Worked? (12/n)
Worked? (12/n)
#IOLCP - 6 week long and 31% deep VCP post climactic action. Resulted into back to back fake breakouts and breakdown.
Specially pay attention to volume action. When it is a trap, it looks picture perfect! (13/n)
Specially pay attention to volume action. When it is a trap, it looks picture perfect! (13/n)
#PRINCEPIPES - Another 6 week long and 20% deep #HighTightFlag with VCP characteristics after a 147% advance in 8 weeks.
Didn't worked until it formed a base on base on base over 87 trading days (roughly 4 months). (14/n)
Didn't worked until it formed a base on base on base over 87 trading days (roughly 4 months). (14/n)
#HAPPIESTMINDS - Another typical 6 week long and 19% deep #VCP after a 320% up move post earnings gap up.
Resulted into a super tasty #VCPChasersSoup π΅and exhaustion of the uptrend. (15/n)
Resulted into a super tasty #VCPChasersSoup π΅and exhaustion of the uptrend. (15/n)
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