The bullish engulfing pattern is a quite powerful one and is most effective following a downtrend and often signals a new bullish direction. Many times the stock will keep running higher right away, but the best way to play it is to wait for a pullback into the candle. That unfortunately did not occur on 2 of the following 3 examples. Below is exactly how the ideas were published in our nightly Game Plans. Anyone who would like a complimentary copy of Thursdays Game Plan please email me at chartsmarterblog@gmail.com.
QLYS was highlighted in our Friday 3/27 Game Plan. The security software group is in strong demand and this name recorded a bullish engulfing pattern on 3/26. On Tuesday it cleared a 48.43 double bottom pivot on light trade, but volume really kicked in today as it blasted above the round 50 handle as well.
Stocks that can be bought at their 50 day SMAs are QLYS. The software security play we highlighted in last Mondays Game Plan with a buy at 42.25 was hit today, but with todays excellent action we can find another entry point. The stock is higher by 19% YTD and 67% over the last one year period and since inception on October ’12 is higher by more than 200%. Earnings have been fantastic as it has risen 4 consecutive times by 14.9, 6.5, 14.8 and 9.4%. Todays powerful move recorded a bullish engulfing pattern off and lets look to enter at a inclining 50 day SMA at 43.60. A double bottom pattern is setting up with a 48.43 trigger.