[isatrader]

Attached is three stocks making Stage 2A breakouts. The charts are weekly and daily, and each is at the close of the week. So assuming that the overall market and group action of the stocks was positive:

1. Which of the following stocks would you buy? Give reasons concerning the various technical attributes that we look for. i.e. Price action, Moving averages, Volume, Relative performance, near term Resistance etc.
   
2. Rank the stocks in order of best to worst? Give reasons.
   

Attached is the marked up charts for the three mystery charts for Quiz Question#3.

Chart #1 was Chesapeake Energy (CHK) in March 2013, which was making a Stage 2A breakout. However, there were a few problems to note in that firstly the most important attribute was missing - an expansion of volume on the breakout week - which was well below average and hence would have been a big negative against it.

The second problem visible is that it was still quite close to near term resistance which was around one year old, and so it had not yet had sufficient time for it to be significantly less important yet, as can be seen better if you view the attached chart below with the ichimuko cloud overlaid on the price, as it was only just clearing the resistance cloud.

The final issue of note is that the Stage 1 base was still relatively small at only roughly seven months or so. Which wouldn't have been a problem if the breakout had had very strong volume, as it's bigger than some Stage 1 bases that are successful, but remember that the bigger the base, the bigger the eventual move in most cases when a stock breaks out of it to new highs on exceptional volume.

       

Chart #2 was Navios Maritime (NM) in March 2013, which was making a solid Stage 2A breakout, with more than 2x the average volume and relative performance moving above a flat zero line which it had hugged for a while.

The base was well developed at just over a year, and it was clear of significant resistance which can be seen on the ichimoku chart below, and also the volatility had contracted during the base especially in the last 8 weeks or so before the Stage 2A breakout, where it got into a very tight range. So it was a strong candidate for a Stage 2A buy with all the key technical attributes in place.

       

Chart #3 was Jet Blue Airways (JBLU) had a similar chart to NM, but with a few slight differences. Firstly the key ingredient was once again missing, as volume was only slightly above average on the breakout - which is not enough. Relative performance was fairly strong above a flat zero line and it was also clear of most of it's resistance, except for it hadn't yet closed above 2012 high, which it was quite close to. And it had a good one year base which had also seen a contraction of volatility. So it was a reasonable candidate, but needed an expansion of volume.

       

So going back to the original questions of what would you buy and in what order would you rank them. NM would be the correct choice to buy, as it was the only one with all the key attributes that we look for, and imo you should never compromise, as good candidates with all the key attributes come along all the time, you just have to find them. And the order would have been 1. NM, 2. JBLU, and 3. CHK.

Below is the charts as they are now, with some notes of how their Stage 2 advances have progressed over the last year so that you can compare them in detail.