The S&P 500 and Nasdaq are now trading above their 50-day moving average…and are now gunning for a 4-day winning streak. However, the market is
What’s been working and yielding results?
For me, it’s been using the combination of patterns, catalysts, and value. For example, I trade only a handful of setups…
Because that’s all you need. In fact, I’ve made over $1M in profits throughout my trading career… from just one of my setups. This year alone, I’m up nearly $336K.
However, it’s not just about identifying the patterns, there needs to be some action in the stock, it has to be newsworthy… In other words, if you can match the pattern with a catalyst, and are able to find a level where the risk/reward is stacked in your favor…then you’ve put yourself in a high-probability position.
That said, I’d like to share with you a case study in Veritone (NASD: VERI), in which I made over $9K profits… it’s not to brag but to show you how the setup works, why it’s repeatable, and how you can nail it too, next time you see it.
There’s been a lot of volatility in the markets these past two weeks… mostly due to trade war headlines. Now, so many traders have been struggling to find a direction and make money in the markets. However, Jason Bond Picks and Millionaire Roadmap clients have been crushing it.
So what are we doing differently?
Nothing really new actually.
You see, we’ve been sticking to patterns, value, and catalysts.
That said, I’d like to walk you through a recent trade that I alerted clients about… that turned out to be a big winner.
Breakout Pattern Case Study
Price action and knowing chart patterns is extremely helpful when you’re trading small caps. For example, if you know a few bullish patterns, you can identify areas of value to buy a stock.
Now, one chart pattern I recently used to lock in 13% in just a few hours on Wednesday was the ascending triangle pattern.
The ascending triangle is a bullish chart pattern, and as the price breaks out of the triangle… the stock typically continues higher. So what we’re looking for is the stock to breakout before we start buying shares.
Here’s what I’m talking about.
Check out the daily chart in Veritone Inc. (VERI) above.
If you notice, there’s a blue horizontal line… and an uptrend line that forms an ascending triangle. What we’re looking for here is the stock to break above the blue horizontal line before we start buying. In other words, the stock needs to break out… and we’re looking for it to continue higher.
Keep in mind, we don’t actually want to buy any stock exhibiting this pattern. We’re pairing it with catalysts, and of course we’re watching the markets too.
For example, last week, VERI reported earnings last week, and overall, those earnings were strong. The CEO of Veritone noted, “During the first quarter, we delivered strong top line growth across the board…”
Here’s what the stock did after its earnings report.
Remember, we had a catalyst and paired it with the ascending triangle pattern.
Not only that, since the market was starting to erase its weekly gains on Wednesday (it went from heavily red to green on news)… so I figured the VERI trade could work by the weekend.
That said, here’s what I sent out to Jason Bond Picks and Millionaire Roadmap clients yesterday.
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Remember the chart from earlier? We wanted the stock to break above the blue horizontal line (around $7.25)… so once the stock broke above that… I bought shares at $7.39.
Additionally, I had a target in mind because in this market environment, having a trading plan helps tremendously.
If you look at the daily chart below, you’ll notice the green horizontal line. That was my target area.
Now, you might be wondering, “Well, Jason… why’d you choose $8? Why don’t you hold onto the stock for a $10 move?”
Well, the green horizontal line is a resistance area. In other words, the stock has had a hard time breaking out and staying above that level… in fact, we saw that happen three times last year.
However, if the stock breaks out of that resistance area (the green horizontal line)… it could run a lot higher.
The reason it could run a lot higher if the stock broke above $8 is the fact that traders were willing to sell at that level. However, if it breaks above $8… that means there aren’t too many sellers trying to keep the stock down… and demand is overpowering supply. Consequently, that should send the stock higher.
Here’s what actually happened with VERI just a few hours after I bought the stock.
The stock broke above $8… and closed at $8.47.
I stuck to my gameplan and sold shares right above my target. I sold VERI in the $8.30’s.
Could I have held on for a bigger move?
Sure… it had range to $10… and I could’ve sold some shares and set a trailing stop on the rest. However, with this market environment, you have to be nimble, so I wanted to secure the win.
Of course, I alerted clients above my moves in VERI.