I've mentioned Travelcenters of America (TA) many times recently, the earliest of which was, I think, this post of August 28th. This stock has soared over 100% in just seven trading sessions. What made this stock such a great example of technical analysis in action?
I think several things come into play, if we look at the late August/early September action:
- Very clean correlation of volume to price action; as the price plunged and based, the volume dropped and got stagnant. Much later, when the price started to firm up, the volume started to rise very handsomely, as indicated by the volume graph below.
- A very clean saucer pattern; if I believed we were at the start of a bull market, I would be turning over every rock that I could to find these, because they are my favorite bullish pattern. Even in this weird market we're in now, this pattern was worth noticing.
- A perfect breakout, retracement, and then resumption – – meaning that a purchase at the retracement represented an extremely appearing risk/reward ratio.
Congratulations to everyone who has profited from this stock. It's a beauty. As an aside, I would mention that PCX recently broke out too, although I don't think the pattern is as sensational as this one was.