Go to Yahoo!. Click the Finance tab. Type stock symbol EUBK in the Get Quotes box. Click Get Quotes. Click on the little chart of the day's trading. If you get the "basic" chart, click on the Interactive link in the Charts section of the links list on the left. You should now be looking at a simple bar chart. If it's a line chart or a candlestic chart, click on the "chart settings" link, hover over Line Type, and choose OHLC. Now, choose a one year chart on the tabs at the bottom of the chart.
I chose this stock based on the data for April 23. If you hover over the data with the mouse, you can see which day you're over at the top left of the chart. Use this feature to find April 23. You can see that, on the 22nd, prices jumped upwards, far above the previous day's high, and far enough to clear a whole cluster of small tops in the previous several months's action. That's a breakout. It doesn't look that dramatic, but clearing all those earlier highs makes it significant.
Significant breakouts are significant because they are often followed by still larger upward moves. They are also significant because they are usually followed immediately by some kind of pause in the upward move, which the trader can use to buy at still advantageous prices.
The action on the 23rd is of the last type, and it typically shows up on the chart just as it does here, in the form of a shorter bar floating to the right of the breakout bar.
We now need to analyze this floating short bar more closely. Once you see the floating short bar, you can place a trade, but you also might want to look for further confirmation. If your breakout pattern is visible on a daily chart, further confirmation is visible on the intraday chart (5d and 1d tabs). But analyzing the intraday chart is somewhat complicated. Could you trade a breakout like this using only the daily data? I'm pretty sure you could. What you would do in a situation like that which you would have been looking at on the 23rd, one breakout bar and one floating short bar is: you could place an order to buy at the high of the floating bar, using a limit order, which forces the market to meet your price, so you are in control. By at latest the end of trading the next day, you would know whether you bought the stock. You might also see some action in the stock. If your chart shows action after the 23rd, you will see that action indeed followed, quite spectacularly. If you bought at the high of the floating bar, you now have a nice profit already, and the question becomes when to sell.
I selected this stock for purchase (but wasn't able to buy before its move up this morning) based on the strong possibility I see in its chart for a very large rally in a very short period of time. According to my hypothesis, certain kinds of charts show a kind of concentrated lever which can cause prices to leap upwards by amounts that would probably be astonishing to most people to think about. These charts are very often characterized by long, narrow horizontal lines at very low prices. Such lines have always looked powerful to me, right from the start of my chart studies, 20 years ago, but I was wary of them, for obvious reasons, which I'll nevertheless state: companies making these kinds of charts can be seen as being on the verge of going out of business. And these sudden jumps in price I've been talking about: can I really prove they occur? No! I hadn't learned to document my work effectively, when I was observing them in earlier days. I can't even prove to myself they once ocurred, but I know what I think I saw. And, another thing: there are ways to explain these sudden jumps in price, and the funny thin lines that preceed them. If you look at these charts, in addition to having made a thin line like that, what you'll see is much much higher than current prices in the past, before the thin line came into force. What I hypothesize is that these are companies that raised a lot of capital during an ealier boom in their stock, and then were smart enough to preserve that capital, stay in business, and continue to build the business, or organize it, during a period of depressed markets. Now that markets are becoming active again, they are in a possition to be recognized, suddenly, as, not a company going out of business, and only to be bought at the cheapest of prices, but a company capable of almost unlimited production in a booming economy.
Now, it still has to be observed that the risk in such investments is very substantial. What I've basically organized for my self is several layers of protection from risk, the very first of which is strictly limiting the size of that portion of my savings I'll invest in these stocks. I would say, sort of at a guess, I have 1/10th of my money in them, and the remaining in cash, and in trust, which can last me, spent judiciously, maybe 5 years, with no additional source of income required. It's not quite as simple as that. I need to keep working as a kind of supervisor of the family business (speaking rather metaphorically), and you, to enjoy similar security, need to keep working at your job, which you probably want to do anyway, and, if need be, your job search, until these prognostications of mine are proven true. However, I expect my $6000 investested in the market, my $1500 invested in the kinds of stocks I'm describing here, to increase ten times, a hundred times, and maybe one thousand times in value. If it increases ten times, I can invest more in the next round and pay for a modest holliday and some research expenses. If it increases 100 times, I'll be almost a millionaire, and can do all sorts of interesting things, if I keep my wits about me. If it increases 1000 times, of course, I'll be a small time tycoon. So all I need to invest to have the possibility of having in effect all that money can buy is a very small, essentially inconsequential amount.
The second layer of protection is patterns in the charts that show continuous active trading. That shows there is interest in the stock, and implies interest among market insiders, and it means you can buy and sell reliably (at or near whatever the market price is at a given moment). I also look at the fundamentals for evidence of real underlying value to confirm this evidence of active trading. Not surprisingly, when I see active trading, I find at least some significant evidence of business strength, and, when I say "some", I mean more than one thing of note at once. This has been very reliable.
Finally, I'm looking for sharply rising prices. These signal moves are small relative to the long term chart, even minute, which only shows how far prices can go, but large, very large, in percentage terms. We'll see prices double overnight on the daily chart, and, on the long term chart, you can hardly see the move. But dramatic percentage increases in price of this sort, and, especially, coming off of base type action (those thin lines, but there's more to say about this last factor) create an extremely stable situation (for reasons I will need to elaborate on in another place).
I said "finally", but there's one more layer, which is the kind of trading on daily bars or daily bars and intraday charts I described at the outset, here.
