Stocks Like SNDK Are Nothing New
Over the last year, I’ve heard people talk about massive winners like SNDK as though these moves are something unique to modern markets. Open William O’Neil’s How to Make Money in Stocks and study the historical charts. You’ll find stock after stock, across more than a century, that looks remarkably similar to the leaders we see today.
Look at TASER in 2003. O’Neil’s chart identifies three high tight flag bases during an advance that ultimately produced a 2,228% gain in 39 weeks. Notice the buy and add points as the stock keeps moving into new highs.
I’ve shared and discussed many stocks with similar patterns over the last couple of years, and the response is often the same: “It looks too extended.” But a stock having already made a huge move doesn’t automatically mean its next setup is unbuyable. I think some traders are missing what bull flags and pennants actually look like, and how tight consolidations or pullbacks can provide opportunities to enter and manage risk. They let fear or memories of past failed trades keep them from taking the next valid setup, potentially missing a huge opportunity.
If you call yourself a growth stock investor or momentum trader, study the biggest winning stocks in history. Buying strength and new highs is central to this discipline. We look for powerful stocks forming valid setups, and we use sell rules to cut losses when we’re wrong and protect gains as trends break down.
History gives us the confidence to buy strength. Discipline helps us manage the risk.
