In our Bulls On Wall Street Bootcamp, we teach our students a variety of actionable trade setups. One of our most popular setups is the bull flag pattern. A bull flag essentially needs three vital components in order to be considered a valid setup. It needs a pole, high relative volume, and sideways consolidation. A prime example is ANET, which was called out by Szaman one of our Bullsonwallstreet head traders who in charge of our daily watchlist. He also moderates our chat and calls our trades in real time! Since then, ANET has broken out of its bull flag setup and just ripped into new highs.
The first piece of a bull flag is the pole and it’s represented by a strong price surge. This pole is best when caused by a fundamental catalyst such as earnings or news. A price surge indicates that buyers are outnumbering the sellers in this stock. On February 17th, ANET exploded from blowout earnings after gapping up and soaring higher.
High relative volume is a strong sign that new buyers have poured into this stock and ready to defend it when it shows weakness. Entering a stock with high volume raises the probability that it’s trend will continue. The bulls didn’t just beat the bears, they destroyed them. ANET’s average daily volume was 729 thousand shares before that day. On February 17th, it was 6 million, a huge spike in volume.
As traders we never want to chase. We must always wait for an entry and a consolidation breakout is what we want to see. After the price surges, we need to price to rest and move sideways for a few days. What the stock is doing is coiling up, like a spring ready to explode. Once it breaks out of its consolidation pattern, we enter the trade with a stop beneath the flag.
If you got into ANET on March 3rd or 4th, you’re on your way to being a great trader.
If you’re not sure of the steps and practices that we’re talking about you can learn them all here at our Bulls Bootcamp. It's an intensive 60 day course to teach you exactly how I trade and why. To learn more or signup, email me at firstname.lastname@example.org today!