Trends start from a low point | stockbee

8/16/2008

Trends start from a low point

Trends start from a low point. Every year in the market a handful of stock for variety of reason make very big moves. They make moves of 100% plus starting from their low. Such moves cannot be explained by earnings or valuation.

FINL is up 526% from its 260 days low. The low was 1.70. You can not explain this move by earnings or valuation alone. There are many stocks like this making big moves.

Stocks with good earnings are not the only stocks that make big moves in a year. If you look at the Market Monitor, there are number of stocks which go up 100% plus in a year. The Double Trouble and Modified Double trouble replicates the IBD 100/200 strategy on these universe of stocks with minor modification.


Here is another stock up 410% from 52 week in just few weeks.



These charts also explains the concept I talked about that trends start from low points. Double Trouble method does very good job of catching such stocks. Modified Double Trouble (MDT) will not catch such stocks in early stages. Also because Double Trouble uses absolute strength cut off of 100% plus strength, in circumstances where no stock has such growth, it will not have any stock. As against that MDT uses Relative Strength. A stock which has negative price growth can still have high relative strength if all other stocks are going down. The 240 stocks in Double trouble universe have such powerful trends and they provide fertile opportunity for specified breakout method.


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