G-Pattern: past plays

[eliteG]

Under this thread I thought we could all study the g-pattern plays that have occurred.  I will post many examples.  If you got um, get um in here. 

G-Pattern:

I recognized the g-pattern when I was looking for the best penny stock moves.  It turns out that this pattern, like any solid pattern, works for any priced stocks.

**Note:  I am not giving any exact technical numbers such as how high volume must be because this is a visual pattern, imo.  To really recognize these you gotta study the past plays and the technical ideas behind them**

Recognition: A stock has gone through a successful G-pattern if:

g1.  Rises up heavily in price and volume.  Volume is the key.  It must stand out from past volume.  This rise can last one day..and I would say a max of 7 days.

g2.  Falls back for at least 2 days.  It is very important that you have at least 2 days of fall back according to my research.  Lots of fakeouts happen with just one day of fallback.  Volume is generally less than the volume rise in g1.  Also a rule I use is that the fall back should not penetrate the low of the low of the first candle in g1.  Its a mouthful but the idea is that if this stock showed a strong volume + price rise.. you do not want this stock going back to the levels this happened from.. you want to see support.

g3.  Breakout and Run tends to happen if high volume comes back in to push the stock past the highest close(or open, whichever is higher) of g1.  This price is called the g-spot and just after the break of this spot on very high volume is imo the best entry.  Penny stocks tend to run 100% or more from the g-spot.  Higher priced stocks still run but not such a high % usually.

2 charts showing the same example follow(the yellow dotted line is the g-spot):

[eliteG]

a strong rise, a slight fall back, a run

[eliteG]

more recent examples

[eliteG]

I wrote a definition of the g-pattern on the first post and now I am just posting everything that I have written about the g-pattern here(sorry if it is unclear but I thought it would be a good idea to lop everything together):

-----------------------------------------------------------------------------------------------

Reply #43 on: July 16, 2005, 02:08:08 PM »
   Reply with quote Modify message Remove message
Thoughts:

Allright, I don't know about you guys but ever since the AMRE +1000% trade by David(http://www.3stocksonfire.org/trading/index.php?topic=178.0)  I have been obsessed with the pennies.

I was truly going to give them up but then BLYC(http://www.3stocksonfire.org/trading/index.php?topic=971.0) and
SFTV(http://www.3stocksonfire.org/trading/index.php?topic=973.0) ran some hundreds of %....geez.

They were never a part of my trading plan before but now they take up a lot of my analysis time and I've decided that shouldn't be the case.  David's .16% calculation (http://www.3stocksonfire.org/trading/index.php?topic=1594.new;boardseen#new) on the chance of a double to occur solidified it for me.

The thing is with pennies you pretty much risk 50% minimum on every play and the only reward worth that risk is at least a double, in my opinion.  I am a quick momentum trader and I like to daytrade.  I am used to exiting a position after a tiny tiny loss.  The pennies just don't fit in to this philosophy.  Yet the thing I enjoy the most about the markets is technical analysis research(yea sounds fun... I know  Wink ).

How I did the technical research for pennies was pretty simple but took a while.  I found huge % (greater than 100%) penny moves and studied the price and volume action before hand.  All these moves had to occur with a minimum volume of 1 million shares.  I asked myself:  are any of these moves predictable using just T/A?

I went in with the bias that volume would be the key because to me volume is the only safety net in pennies.  Volume bursts in the pennies are tricky things.  I think a trader would zero there account in less than a month playing penny volume bursts.  They can be very fake signals.

I got rid of all the noise on the stock chart.  No moving averages, no indicators(other than volume).  Stocks rising many % are not going to bother with moving averages or indicators.  Just a linear chart showing prices and volume.  And I studied...and I found out some things but they are pretty worthless without a trading method behind them.

So I worked on that and have some things figured out.

So here is my finding and how I will trade it:

Basically:
A price increase with volume burst which falls back and then breaks out, with volume, of the highest close of the volume burst rise can rise a heck of a lot.

More Technically:
-Filter: on entry day: stocks < 0.50 with volume > 5,000,000
1.  Price increases with many times avg(60ema) volume.(this volume increase must stand out compared to other past volume of stock)
2.  Price falls back for at least 2 days.
3.  Entry is when price crosses the highest close since the volume rise with volume > avg.
4.  still working on exit plans

These plays do not setup often.  But I will be ready when they do.  I estimate 20-40 like these per year.  From now on these are my only penny plays.  Back to stock picking.

Any feedback, suggestions, advice or other research welcome.

Basic idea picture..and I'll follow with some examples.

----------------------------------------------------------------------------------------------

« Reply #62 on: July 16, 2005, 04:24:20 PM »
   Reply with quote Modify message Remove message
to make sense out of the pattern I see:

1st stage: up impulse
some people find out news ahead of public and cannot keep price down to get the amount of shares needed(1st high volume move up)  These people are not interested in long-term gains.

2nd stage: down/flat/drift
If stock continues up immediately I have noticed more failures because those who just bought have an instant gigantic profit.

A few down days afterwards solidifies the original purchasers(1st high volume move up) into getting a big gain from this stock and they support it.

Meanwhile those who noticed the volume burst are researching into the company.  Trying to dig up news and check on fundamentals.

3rd stage:  up and away
Those who were digging find something, momentum traders join in, news release or release pending.  The height of this stage may be based on visibility in the trading world.

Obviously, you see, I believe that the penny world is just hot air.  You may find an exception, I hope BRVO turns into this, but I believe that chance is lower that .16%.

Goodluck to everybody, hope these charts help spark some ideas...

----------------------------------------------------------------

« Reply #97 on: July 18, 2005, 01:30:52 PM »
   Reply with quote Modify message Remove message
aha...good point, about the volume, i think I will propose that depending on the volume in stage1 will be the size of your position in stage 3...actually more on the $volume.  We don't want to be buying hundreds of thousands of shares with only 1million volume on this stock play.

In my view the theory is based more on the picture than an actual technical requirements.

1. an upwards movement on crazy volume(highest or near highest of the year but also much higher compared with surrounding volumes)

possibly explained by:

1st stage: up impulse
some people find out news ahead of public and cannot keep price down to get the amount of shares needed(1st high volume move up)  These people are not interested in long-term gains.

2.a fall back of at least 2 days(but not too long...not sure) that doesn't pentetrate stage 1 low and usually occurs on lower volume than the highest volume of stage 1

possibly explained by:

2nd stage: down/flat/drift
If stock continues up immediately I have noticed more failures because those who just bought have an instant gigantic profit.

A few down days afterwards solidifies the original purchasers(1st high volume move up) into getting a big gain from this stock and they support it.

Meanwhile those who noticed the volume burst are researching into the company.  Trying to dig up news and check on fundamentals.

3.
stock passes by highest body point(highest close or open..higher of the 2) with lots of volume...this will be intraday so you will need to extrapolate volume to see if it is heavy...thats the trigger point

possibly explained by:

Those who were digging find something, momentum traders join in, news release or release pending.  The height of this stage may be based on visibility in the trading world.
---------------------------------------------------------------------------------

« Reply #109 on: July 18, 2005, 09:03:12 PM »
   Reply with quote Modify message Remove message
I wanted to discuss an intracacy of the g-pattern(i believe)

The stage 1 high volume move can be multiple days and sometimes just one day.  We need to make sure the low of 1st candle in the high volume rise(stage 1) is not penetrated in stage 2 fall back.  This happened on NVAS:

----------------------------------------------------------------------------
    Re: Definition ogf G Spot pattern
« Reply #2 on: July 22, 2005, 11:49:35 AM »


I came up with the G pattern when I was studying explosive penny stocks of the past.  This is what they had in common:

g1 stage:  A big upwards volume move.  Where volume stood out from the rest of the chart as price climbed strongly.  (no exact numbers..this is a visual pattern)

g2 stage:  A fallback of price and usually of volume that does not pierce the low of the start of G1.

g3 stage: broken into 2 parts

         g3a:  breakout is the break of the highest close or open, whichever is higher, of the
                 g1 stage.  This needs to show heavy volume as well.  Entry can be anywhere
                 on breakout day but I recommend the breakout point(g-spot, g-trigger)

         g3b: after-breakout...the pattern on penny stocks generally runs a minimum of 100%
                from breakout

--------------------------------------------

i think thats it...