I entered a new position today, long both $GPT and $ZTS. I entered these today based off the daily chart patterns they’ve developed over the past few weeks. The pattern I look for is a simple one, it is called The Coghill Flag and a basic outline of it is below, if you would like a more detailed description of this type of trade, following this link: The Coghill Flag. The reason I purchased these stocks is that they are both:
– Relatively Strong (to the rest of the stocks in the market)
-> Meaning, they are both above their 21 ema and holding while most stocks are chopping up and down them
– Both stocks are consolidated within tight patterns
-> This means that the Bollinger Bands are pinched together in a compressed state
– Both of the stocks have easily defined risk
-> The stop for $GPT is below today’s lows and the stop for $ZTS is below the 21 ema on the daily chart.
– Both of the stocks are ‘holding higher’
-> This means that they are showing commitment to their recent gains in price (bulls continue to demand the stock and soak up the supply).
The trade is simple and the above reasons are the only reason why I purchased these stocks. I am not here to over-complicate things, let’s simply focus on what’s important (following our process) and forget all the nonsensical over-complex descriptions of the WHY. Below are the charts of the two stocks listed above.
If you would like to learn more about this pattern I am trading, you can do so here –> The Coghill Flag