New Buy:(ARST)

Just off my time in the penalty box I made a small purchase today of ARST at a cost of $14.00 per share. This is just over the $13.95 buy point, and I waited throughout the day until about 3:30pm to get that price - I really didn't want to chase the stock up much past the pivot.


I read the chart pattern as a large, deep cup with a handle that formed with a buy point of $10.10 from the week of January 16th. The volume dried up very nice in the handle looking at the weekly chart, and then exploded on the breakout the week of March 6th. This was the week this new rally began, and it's a positive sign that ARST was one of the first stocks to breakout.

The stock easily advanced 50% from this breakout in just six weeks. Last week it tested support at the 50 dma and came directly off of it, setting the new buy point as the recent high of $13.95.

What I don't like about (ARST) is the relative strength line lagging a bit. What I do like is the massive volume surge as the stock has made this move. It looks to me very reminiscent of (TNDM), (SNDA), (NTES), the other notable winners in this rally.

I would say more than any other factor I now look for that trademark surge in volume with a ratio of something like five weeks of accumulation to one week of distribution as a stocks works on the right side of a base. If the stock breaks out to make an all time high like (TNDM) and (ARST), that's even better. If it's a recent IPO like (TNDM) and (ARST), again - even better.

I've set a 5% stop on my purchase. I still feel the need to build myself a strict set of documented rules for stops and other aspects of my trading. I think without a strict set of rules I will spend too much time (and money) second guessing my decisions. I'll tighten up the stops when I should let a stock run, and vice versa. I think I'm better off picking a fixed percentage and using it on all my purchases. It's something I'll have to spend more time working on.