Markets have been trading abnormally tight recently and they now seemed to have broken through recent digestion as they formed prior bullish consolidation patterns. These take the shape of bull flag formations, which tend to be continuations higher of the way the prior trend developed. They are nice too because they will give you measured moves, of course it is not a science, but gives one a guideline to where maybe one could trim a holding. For trend followers like myself they are just patterns within much longer ones and below are some recent examples of how they look and can be played.
In our Friday 5/26 Game Plan this is how we looked at VRTX. VRTX is a pharma play higher by 61% YTD and 40% over the last one year period. It has recorded four consecutive positive earnings reactions higher by .7, 3.6, UNCH and .2% on 4/28, 1/25, 10/26 and 7/28. The stock is higher 5 of the last 8 weeks and by .5% this week heading into Friday and did score a combined 27% weekly gain ending 3/31-4/7. It has displayed great action POST breakout from a weekly double bottom trigger of 103.83 ending 3/31 and enter VRTX now with buy stop above weekly bull flag trigger which aligns with round 120 number above 120.25 which carries a measured move to round 150 figure.