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Take a look at HOOK, Craft Brewers Alliance, a long solid base, very low volume, no analysts, it had a nice rise on low volume, then had a major shakeout and now should be ready to rise 200%-500%. If you arent familiar with Ted Warren, you will think im crazy.
Hello! I just saw your this msg posted in January 2010, the price indeed went up over 200% within 8 months! I just recently purchased Ted's book and become his humble reader. One question I have and I hope to get your feedback pls: By just focusing on the chart of a stock to predict its future movement seems a little risky. How about it dive down and went all way to bankrupt? Do you have any good ways to prevent it? Thanks!
The two most important things to watch using Ted's method is chart patterns and volume. You want stocks with low daily volume. If a stock has a large drop and there were no volume spikes, there shouldn't be anything to worry about because it's obviously manipulation and the "insiders" are trying to get rid of the weak holders. If a stock has a large drop with 5x more volume than average (example), now you have something to worry about. The "insiders" are selling and even if you are at a loss, you might want to sell too. That's what I did with HOOK. The average daily volume was less than 100,000 at the time. It almost broke $10, then went into a big shakeout. The initial drops saw volume over 1 million each day, which are huge red flags that more drops are to come. The more volume a stock has, the more out of control it is because you have to assume the public is irrational. Ted Warren basically wants you to be a parasite on "big money" players. You can't beat them, so it's best to predict what they are planning and to go along for the ride. When you look for a Ted stock, look for low volume, a long chart history, patterns, and no major sell-off (you can tell if there was a major sell-off by looking at volume spikes during drops). Also, by insiders I don't mean actual insiders. You can refer to them as "Big Money" or whatever you like.
I'm no expert when it comes to Ted Warren, so please take my advice and interruption with a grain of salt. I still trade using my old methods as well Ted Warren's method. If you have any other questions feel free to ask. Also, if you think you found a good Ted stock, please share!
Bmw, so in other words, look for a low volume stock and wait for a low volume sell off, like a bear raid sort of event, and then buy in and ride the institutional coat tails as they run it back up, is that the gist of it? If you would, take a look at FF and tell me what you think. I've had my eye on them for a few weeks and really like the fundementals (strong earnings, zero debt, and a nice yield with a low payout ratio). Thanks!
Bmw, so in other words, look for a low volume stock and wait for a low volume sell off, like a bear raid sort of event, and then buy in and ride the institutional coat tails as they run it back up, is that the gist of it? If you would, take a look at FF and tell me what you think. I've had my eye on them for a few weeks and really like the fundementals (strong earnings, zero debt, and a nice yield with a low payout ratio). Thanks!
You want to have a long chart history, ideally 10+ years. You can make exceptions, but the longer the better. You want to see a previous sell off that was under low volume followed by a base for multiple years where the stock basically doesn't do anything. This base is created to discourage all the weak hands to leave the stock. There are usually people who buy a stock after a massive drop, speculating that it will have some bounce. However, when a stock is stagnant for many years people get impatient and figure, ehh this stock is dead. Sometimes you will see them test the market and send it up to attract buyers to see how far it can go up. Once they have an idea, they'll do a shakeout to once again try to weed out the weak hands and pick up more shares before the true breakout. The strong hands behind the stock might make the stock base for 2 years, 5 years, 10 years, until they think it is ready. Once you find a stock with a previous sell off and a long base, you can watch for chart patterns. Until the first two things occur, looking for chart patterns doesn't mean much according to Ted Warren. You want to find the chart pattern to predict when the strong hands decide to take it for a ride. Ted Warren believes there is too much money for it to be a fair playing field, so if you can learn to predict when the strong hands or whatever you want to call them, will send the stock up, you can make money basically being a parasite. Once again, I'm not a Ted Warren expert, but this is the basic idea that I got from his book and from talking with other Ted Warren followers.
In regards to FF, I don't think it would be considered a Ted Warren stock because there were major volume spikes during the sell offs, not enough chart history and no long base. Generally, the longer the base, the greater the potential pop will be. It's interesting there was low volume when it popped from around $6 to $12 though. That reminds me, high volume during breakouts is just as bad as high volume during sell offs.
So how have you done doing this? From what I'm reading you're basically trying to predict when the high rollers are going to buy that stock in large numbers?
So how have you done doing this? From what I'm reading you're basically trying to predict when the high rollers are going to buy that stock in large numbers?
I've done well so far with BREW (HOOK) and TASR. These are the only Ted Warren stocks I've bought. My average price for BREW was around $5.50 and I sold it around $9.75 and I bought TASR around $4.50 and I sold it around $8. It's very hard to find a stock that meets the criteria I mentioned earlier.
It's not about predicting when they buy in large numbers. They slowly accumulate shares during the long base. They want to do it under the radar, which is why a good base lasts around 3 years at least. Once the breakout occurs and you see high volume, that's the sign to sell the stock. The average investor is irrational and emotional, so when they send the stock up, it grabs the attention of average investors wanting to join the ride up. When you notice a large volume spike, that's your sign to sell it.
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Good call on HOOK!!
