Now and then, there are a handful of stocks that soar 100% in a short period of time. The stock of Kronologi (a Malaysian tech stock) which I have been stalking for the past 2 months is one of them. Although I'm a US market trader, it often surprises me to find repeatable stock chart patterns from stocks all over the world.
I found one of them in my own backyard and using the same principles I used to analyze American stocks, we can often get winners in any market in the world. Just as Linda Bradford Raschke had said, those who utilizes chart patterns can make a living in any stock market in the world. The good trader can often find gems no matter whether it is the US stock market or the Brazilian stock market or the Malaysian stock market. I just prefer the US market because it is the most liquid market in the world for stocks.
I often like to comment and analyze things that are happening and post them in my website and telegram group. After all, as traders, we seek to find gems as the real time market is happening and not just be the master of hindsight. But now and then, I will look back at stocks that have performed extraordinary well, analyze, study them and learn from it to know why it went up from a technical point of view.
Those who study winners in the past and look for characteristics of a winner will often be able to spot them in the future and that is the purpose of this page. We will study and have a look at Kronologi and see why it went up and at the end analyze where it might go in the future.
From the chart above, we can clearly see that Kronologi is a stock that has benefited from a stock chart pattern called an ascending triangle. The ascending triangle is a bullish continuation pattern which is very useful to stock traders to spot a stock that is about to move higher. In a sense, the stock is making higher lows as the pattern forms and this tells us that the stock is getting stronger every day as the pattern forms.
To learn more about the ascending triangle and how to trade this pattern, read this in depth article I have written sometime ago, How The Ascending Triangle Can Be A Great Setup For Longs In All Time Frames.
To the many doubters out there who do not believe in chart analysis, this key fact will help to keep the doubts away. Why in the world do we want to look at stock charts? The simple reason is that stock charts do not lie and they never lie. CEO, CFO, COO, directors, etc etc can lie about the state of their company while secretly selling off shares but stock charts that comprises of price and volume do not lie.
In other words, the stock chart shows us the footprints of all the market participants in the stock. The smart money as well as the dumb money. But one big clue to where the smart money is pouring their money in is when there is an unusual volume in the stock.
Unusual volume happens when there is a volume spike in the chart. This shows buying interest and accumulation in the stock.
For further reading about volume and how they affect stock prices, you might want to read these articles I have written below:
When it comes to the stock market, being at the right place at the right time is important to capture the biggest profits in the shortest time possible. One of the things about the market is that you should be in the best sector. Park your money at the hottest sector and you will reap huge profits. Sector bull markets can last from 3-9 months and sometimes even longer.
In Malaysia, one of the best performing sectors in 2017 is the technology sector and this has helped to lift up many many tech stocks in Malaysia. Kronologi was one of them. Sometimes when a stock has good fundamentals but does not rise, it is because of the sector's performance. When the sector starts an uptrend, the depressed stock that has good fundamentals will explode higher with it. Remember, it is not only the right place you need to be in, you need to be in at the right time as well.
Ok, I'm going to recycle some past materials. In the past in July 30 2017 I did some commentary and case study on Kronologi along with possible entry points, so I'm going to put them here for your reference.
By the way, the stock was already in an uptrend. I'm a trend follower and that is why when I saw this stock, it was on my radar. I believe it will easily be in the radar of the majority of trend followers as well. To learn more about trend following, read this article I wrote 7 Reasons Why Trend Trading Beats All Other Trading Strategies.
For a primer on trends read this article The 3 Different Trends Of The Stock Market.
Below are two chart analysis of Kronologi I did for a friend on Aug 17 2017.
Kronologi has run up quite a lot and since it is in an uptrend, the likelihood of it going higher is good. It often surprises people how high stocks can go. But that is the secret of trend following. We never try to think how high a stock can go, we just follow the trend. It takes a lot of emotional and mental discipline to be as simple as a child and follow the trend. Its best not to make things too complicated.
This is just one of a thousand stocks that are the beneficiaries of a trend following system. While the fact this stock has gone up 100% is impressive, there has been hundreds of stocks that have gone up 1000%, 2000% and even 20,000% over the years by simply being in an uptrend. As the saying in Wall Street goes, "The trend is your friend". Follow the trend and pick stocks that are trending and you will be at home with the best in Wall Street.
I believe that there is an endless amount of lessons that we can learn from a stock as it continues to trade. Fast forward to the month of October 2017, Kronologi made a top at 1.10 and then proceeded to corrected to the previous high support area of 0.90.
The daily chart of Kronologi above shows how the stock met a measured move and then formed a topping tail. After that, it corrected to the previous high of around 0.90. The concept of support and resistance really did its work here. A former high once overcome becomes the new support for Kronologi.
At this moment, I still consider Kronologi to be healthy. It stopped dropping at support, broke a downtrendline and is continuing its uptrend. It is still above its rising 50 MA and thus we should consider the uptrend intact. However, there are a few things that will make me need to monitor this stock closely.
The weekly chart of Kronologi above shows that this stock has been in an uptrend for a long time. The question now is the stock topping or is it just resting before shooting higher? The volume as it corrects gives us a small hint that there is not much selling.
Things are still alright for this stock at the moment. I would like to see it consolidate if it goes back up to 1.10. When it reaches there, we need to be aware of divergences between price and oscillator. We don't want a double top to form. The best is for it to trade sideways awhile and then breakout higher.
On the other hand, if it can't rise to 1.10, we at least do not want to see it drop below 0.90. No matter what it does within the price range of 0.90 and 1.10 that's alright. We just don't want it to drop below 0.90. A trading range within the 0.90 to 1.10 area will act as a rest for the stock and hopefully it will breakout higher in the future.
Charts with the Freestockcharts.com label are courtesy of Freestockcharts.com
Charts with the investing.com logo are courtesy of Investing.com powered by Trading View
Oct 27, 21 09:09 AM
Are the markets in an uptrend or downtrend? Where are the support and resistance areas? Stock market analysis for October 2021.
Oct 26, 21 05:47 AM
A look at Tesla stock chart using technical analysis. Is it in an uptrend or downtrend and where are the support and resistance?
Oct 25, 21 09:20 PM
Technical analysis of KLCI, learn the trend of the index and support and resistance areas.
Oct 24, 21 07:32 PM
Analysis of oil prices. Is it in an uptrend or downtrend and where are the support and resistance.
Oct 24, 21 07:03 PM
Learn how the cup with handle pattern hinted of a big run in CTXR.