AskGil

By Ask Gil

January 10, 2012 12:10 am ET

Q: Could you please explain a “short stroke” pattern?

G: As I understand it, a short-stroke forms after a stock has a big move up on a weekly chart on a breakout, and then the next week has a very tight range and the stock closes at the peak of the week as volume dries up. You can see this on the attached RIMM chart. The short stroke is only a week long. After a big run-up from its breakout, a stock may show tight trading action for a week as volume drops. Usually it stays about flat compared to the prior week. If you spot a short stroke and the stock meets all your other buy criteria, when should you buy? Wait for it to surge on heavy trade, which indicates mutual funds and other big players are buying shares.