Rare High Tight Flag Offers Investors Opportunity For High Returns

Investor's Business Daily today has a description of "Rare High Tight Flag Offers Investors Opportunity For High Returns". This they present as a opportunity to find stocks with extra ordinary momentum, which pause for a short period of time and then again breakout.

When stocks create proper bases and break out of them, they provide investors with sound buying opportunities.

Common patterns include the cup with handle, flat base and double bottom. Less common are the saucer and ascending bases. The rarest of all is the high, tight flag.

If you're lucky, you'll spot one or two of those in a bull market. They provide an opportunity for serious gains if formed correctly — and you recognize them properly.

The stock will usually surge 100% to 120% in a short period of time, four to eight weeks. This forms the pole of the flag.

It will then correct no more than 10% to 20% in three to five weeks, tracing the flag portion.

The ideal buy point is at the peak of the flag plus 10 cents.

Investors can make 200% on a stock that surges from such a pattern, which acts as a brief pause amid a huge advance.

But it's also a difficult formation to interpret correctly.

Syntex is a classic example of a high, tight flag, even though it happened way back in 1963.

More recently, Taser International (TASR) displayed similar characteristics in 2004.

Now one way to look at such opportunities is by visually finding such stock. The other better method is by following the Double Trouble scanning methodology.

If you look at what IBD is saying closely, we can break down key elements of the statements:
The stock will usually surge 100% to 120% in a short period of time, four to eight weeks.

It will then correct no more than 10% to 20% in three to five weeks, tracing the flag portion.

The ideal buy point is at the peak of the flag plus 10 cents.

Investors can make 200% on a stock that surges from such a pattern, which acts as a brief pause amid a huge advance.

Here is a Telechart interpretation of the same:

8 weeks price growth>100%
( 100 * (C - C40) / C40) >= 100

Correction of no more than 10% to 20% in three to five weeks.
Here we use the 15 day (3 week)growth value to sort stocks meeting above criteria.
100 * (C - C15) / C15

So the stocks meeting the first condition of 100% growth in 40 days can be sorted with the value of second scan to look for stocks which are pulling back or pausing. As of today no stock meets both the conditions. But as the article says, such stocks are rare so you will anyway get only few stock meeting this criteria.

Update: Based on the comments and emails I got, you can update the scan to

( 100 * (MAXC40 - C40) / C40) >= 100

Rest of the conditions are more guidelines, so making too specific scans for them might not serve much purpose.
To eliminate lower liquidity stocks you can use a cash flow scan:
AVGC20 * AVGV20 >= 2500