Taser Intl: High, Tight Flag

Taser Intl (TASR) is well-known for being the leading manufacturer of non-lethal stun guns used by law enforcement.  The company saw its stock make a major move starting in 2003 when the stock was heavily shorted, and the company's products gained popularity.

TASR previously formed a high, tight flag formation (as introduced by Wm. J. O'Neil in his best-selling book "How To Make in Stocks") back in July of 2003.  From that breakout, the stock advanced a stunning 2,738% in the ensuing 39 weeks.

Here's the chart setup from 2003.  Note that the prices in the chart reflect multiple splits that took place during the run up.  The actual breakout price was a little over $13 a share.

Click on chart to enlarge.

Recently, TASR saw a surge in earnings due to new orders, and the stock jumped dramatically in response.  It settled down for a few weeks in tight consolidation, then burst to new highs on expanding volume.

I mentioned the idea that TASR might have completed this formation back on November 5 on StockTwits and Twitter.

The last 2 weeks the stock has displayed relative strength as it's been sitting just above its breakout from the flag, while other market leaders like Tesla (TSLA) and Linked In (LNKD) have seen significant profit taking.

Today, TASR seems to have regained its strength and looks poised for another move higher.  Here's an updated weekly view of the stock.  While the stock is not heavily shorted like it was back in 2003, it's still worthy of consideration.

 Afternoon update:  I've added the daily chart as of 2:10 PM for comparison to the 2003 setup.

Compilation of Recent Charts Posted on Twitter

Here are a few charts that I have posted recently on Twitter and StockTwits.

Notably, Tesla (TSLA) was profiled several times and the action played out as the charts displayed both on the upside and downside.

Currently I am looking for a pullback in the broad U.S. indices.  All I hear on financial TV (CNBC & Bloomberg) and Twitter is that there is no bubble, valuations are more than justified given the level of interest rates, price earnings ratios at prior bull market tops were much higher, and the Fed is at our back with QE.

While I agree that we're not in a bubble (yet), the resounding drumbeat of professional market analysts largely saying the same thing gives me pause on equities, near term.  We have seen a big surge in initial public offerings (IPOs) recently.  Almost to the point where they're thinking, "just get it done before this all ends".

Top it off with the Twitter IPO today.  It all smacks of some sort of short term top.  But what do I know?

There's also a popular thesis that the U.S. stock market is "the only game in town" ~ popularized repeatedly by CNBC Fast Money contributor Stephen Weiss.  When these arguments are put forth by respected market professionals, it is probably best to book partial gains and wait for a better entry.

For those who say "don't fight the tape" the trend is up so just go with it, I cannot disagree.  But know that if you do, you're playing on borrowed time and your timing must be near perfect.  And few of us are perfect at anything.

But we're all going to buy the 2-3% dip, right?  Trade carefully, my friends ...

As always, use stop losses to protect your portfolio from big losses.  

Click on charts to enlarge.

Bear flags in TSLA, but expecting a brief respite.  It worked as the charts showed for adept traders.  Tesla got up to $174.50 before resuming its decline.

After that brief reprieve, TSLA dumped down to $153.50, where this chart called for a move back to the $180 area.  It got as high as $181.43.

Here were my comments on Twitter for the chart above:  "60 min. chart shows pos. RSI divergence over last few days, could bounce back to $180ish area"



Here's a chart of the QQQs from November 5.  The chart shows a rounding top with several closes well off the daily highs.  This was a warning of subtle distribution taking place.  The lines in green show the expected zone of support.

Here's a weekly chart of market leader Linked In (LNKD) posted yesterday on Twitter.

Here are several charts of Netflix (NFLX) posted Tuesday and Wednesday on Twitter showing a negative divergence in RSI.  I expect an initial pullback into the $320 area.