A Review of the Key Elements of High Tight Flags

http://www.highgrowthstock.com/LearningCenter/InvestMethods/WBInvesting/HTFlag.html

A Review of the Key Elements of High Tight Flags
High Tight Flags are usually rare beasts. Only a couple each year go on to be really long
term winners. However, HTF’s also turn up two a penny when:

a) There has been a long spell of drought in the Nasdaq small cap stocks
b) There is excessive froth in the market as we witnessed in the March through June 1996 timeframe, and then of course more recently from October 1999 to March 2000.

There are always two phases to HTF’s:

1. First Leg:

a. A strong breakout from a long, long base
b. Flagpole is always >50% rise in price; invariably 100% up
c. The Flag then forms over a two to three week period
d. The Flag droops down slightly…. e. Great leading stocks will rise above the 4 Day MA and correct back to the 9 Day MA


One usually misses the first run up the Flagpole, but wait for the

2. Second Leg:

a. The second leg is almost equally rewarding
b. Expect at least 70% of the previous rise for the second leg
c. At the bottom of the flag, the volume goes quiet – this is the key
d. Buy on the first signs of Volume and Price increase AFTER “quiet”


Technical Analysis:

a. Be patient; don’t buy on the “greasy” flag pole
b. Wait for the drooping flag to form over 1 to 2 weeks
c. Watch for the volume to go “quiet” at the bottom of the Flag
d. Buy when the price rises off the bottom with good volume
e. Always use the 4, 9, and 17 Day MA’s with a three month chart
f. Buy when the 4 Day MA comes up through the 9 Day MA and/or
g. Buy when the 4 and the 9 Day MA’s come up through the 17 Day MA