splash

I already own a few hundred shares. I think I bought them at $1 and now they're down 80%.

I bought because of the chart. I remember I really liked it. I still really like it but I'm thinking more carefully about why.

Basically I see this going to 10 again ... some time this year, maybe? next year, maybe? ... and then back to zero again.

I checked the fundamentals.

I actually like this company. What they do sounds important, and it sounds like they're good at it. They're selling a lot more than they were three years ago - still a tiny business, but up significantly. They're losing money at a fair clip, though less of a clip than three years ago, so there's a positive twist to that as well.

I stand by my prediction. These guys don't have enough momentum to take over the world, and when that becomes obvious the market will abandon their stock, and it'll go back to zero for a long time, but the market is right to support them now. They're doing good work. They are also able to make their case to the market. That's what pushed the stock up to so much higher levels for a considerable period - all of 2013, I mean, anyway. And it certainly jumped up there. That's called a splash. Somehow they made one. My gut tells me they're good for another one in this episode.

It's certainly tempting to study this chart closely. If we could just catch two splashes of the sort shown here, in a year, we could do very well. And the chart from 2009 to 2012 is the exact kind of chart we would expect to see before a splash. What type of chart is that? Hmm. Over a four year period, small splashes - but a splash is a splash - a splash is instantaneous - separated by wide, shallow troughs. More precisely what we can see is a set of splashes, a wide shallow trough, another set of splashes, and another trough forming ... and with a surging quality to it. Looking for that kind of chart we could catch a splash.

Will every such chart produce a splash? Will every such chart produce a splash this big? Who know? Not me. If you're starting out, try to catch splashes with $100 investments. If you catch one right away you'll then have a couple of thousand dollars in free investment money (though you'll have to pay taxes on your gain, don't forget). And if one of those investments after another is a bust, you're still only out a few hundred dollars. That's the risk and reward on this system.