Despite it being the hottest start for S&P 500 stocks since the late 90s… the bulls are still in charge after yesterday’s price action…
My stock universe consists primarily of companies trading under $10 per share. I teach my clients 3-core trading setups. It’s the same setups that I used to make $276K in trading profits this year.
(I alert my trade ideas in real-time, click here to find out how you can start receiving them too. )
Now, you must be thinking, if I master the three patterns you teach, can I have similar results?
It’s possible…but it’s also possible you do even better (make sure to check out my milestones program)…like some of my other clients who I’ve already developed into millionaire traders.
But here’s the thing…
What I teach goes well beyond just learning chart patterns… I also bring experience to the table. This experience will help you cut the learning curve down.
Furthermore, there needs to be a catalyst to match the chart setup. Learning which catalysts move stocks is a skill you acquire after years of trading experience.
That said, the fish hook is one of my favorite trading patterns…but I don’t always trade it. Keep reading to find out my thoughts on when the best time to take this setup and when to avoid it.
Fish Hook Pattern Explained
If you don’t already know what the fish hook pattern is, there are three things I look for:
- A steep drop.
- The stock finds support (an area or price level that it has a hard time breaking below).
- The stock catching a bid (bouncing off the support level).
Once we see those three components, we identify an area of value to buy the stock.
Now, if you want to learn more about this pattern, check out this classic fish hook pattern that Millionaire Roadmap and Jason Bond Picks clients scored on.
Yes, the fish hook pattern works a lot of the time… but there is a time and place for this pattern.
When You Shouldn’t Use the Fish Hook
For example, clients have been asking me about Proteostasis Therapeutics (PTI). This is one case in which you would not rely on the fish hook pattern.
The reason being: fish hooks don’t work as well in biotech stocks as they do in non-biotech stocks. There’s a lot of news surrounding biotech stocks, and chances are… if a biotech or pharmaceutical stock had a steep drop… it was due to negative drug data. Not only that, it may be the only drug in the pipeline.
Here’s a look at the daily chart on PTI from Finviz.
Did these traders get the pattern right?
Yes, it’s clearly a fish hook pattern.
But remember, we like to pair the chart pattern with catalysts and an area of value.
However, PTI actually released data regarding one of the treatments in its pipeline, on March 25… which is where you see the big gap down.
That in mind, the pattern is pinned due to outlook, for example, the bear flag pattern may be in the cards here. I’m not saying its true with PTI, but it’s often the case… especially if the stock falls to around $1.
The market sees little value in the stock any time soon.
That’s what I mean by, “I think it’s pinned.” Think of a wrestler who is out of energy… with their back driven into the mat… it’s near game over.
Here’s a look at the daily chart on PTI.
But the stock could pull something like this…
Basically, the stock is really in a weird spot… where it looks like a fish hook, but it also looks like a bear flag… and there has also been negative news.
With this specific example, it’s hard to identify an area of value, as well as any positive catalysts in the cards.
That said, I teach Jason Bond Picks and Millionaire Roadmap clients to focus on non-biotech stocks when they’re trading the fish hook pattern.
If you’d like to learn more about this trading pattner and receive my alerts in real-time…
Source: JasonBondPicks.com | Original Link