All stocks at some point in time will go into a period of consolidation. This is healthy as it allows the stock to digest its gains and set a new area of support from which to eventually move higher.
One long side pattern that typically yields big gains is what we call the “Right Side Of The Cup Crossover Pattern”. Let’s take a look at SNHY:
As you can see, after a nice uptrend, SNHY consolidated its gains and traded sideways tracing out the bottom of a cup formation. By trading sideways, it has created a trading range as outlined by the blue box.
The right side of the cup crossover occurs when SNHY cleared this blue box to the upside — that’s the point to initiate a long side trade as it usually signals that the stock is ready to build the right side of the cup. In this case, SNHY ran from $26 to the $33-34 range in short order. Just one or two trades like that a month will take your portfolio places.
Now let’s look at a current set-up — VHC:
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