As of 09/28/2022
  Indus: 29,684 +548.75 +1.9%  
  Trans: 12,457 +303.78 +2.5%  
  Utils: 945 +10.61 +1.1%  
  Nasdaq: 11,052 +222.14 +2.1%  
  S&P 500: 3,719 +71.75 +2.0%  
YTD
-18.3%  
-24.4%  
-3.7%  
-29.4%  
-22.0%  
  Targets    Overview: 09/15/2022  
  Up arrow32,000 or 29,200 by 10/15/2022
  Up arrow13,800 or 11,800 by 10/15/2022
  Up arrow990 or 900 by 10/15/2022
  Up arrow11,975 or 10,700 by 10/15/2022
  Up arrow3,800 or 3,500 by 10/15/2022
CPI (updated daily): Arrows on 9/28/22
As of 09/28/2022
  Indus: 29,684 +548.75 +1.9%  
  Trans: 12,457 +303.78 +2.5%  
  Utils: 945 +10.61 +1.1%  
  Nasdaq: 11,052 +222.14 +2.1%  
  S&P 500: 3,719 +71.75 +2.0%  
YTD
-18.3%  
-24.4%  
-3.7%  
-29.4%  
-22.0%  
  Targets    Overview: 09/15/2022  
  Up arrow32,000 or 29,200 by 10/15/2022
  Up arrow13,800 or 11,800 by 10/15/2022
  Up arrow990 or 900 by 10/15/2022
  Up arrow11,975 or 10,700 by 10/15/2022
  Up arrow3,800 or 3,500 by 10/15/2022
CPI (updated daily): Arrows on 9/28/22

Bulkowski's Georgia Gulf Trade

Georgia Gulf: Backstory

Georgia Gulf trade

Now that the trade is over, I can tell you about it.

Georgia Gulf (GGC) is a company that I traded many times over the years, but forgot about it until discovering it at point A on the accompanying chart. I first marveled at the large drop in the stock (it was at 20 in August 2007) and my next thought was, "You've got to be kidding!"

I knew the company was worth more than $3.12 a share (the low at A). I started to do my research but the next day, the stock took off and closed 25% higher, so I lost interest. I won't chase a stock upward.

Anyway, I dug into the fundamentals and found that the company has a book value of about $11 a share so if it went bankrupt, there might be a few pennies left for guys like me. I considered it a steal because I think it could trade at $20 in 2 to 3 years. So, I watched the stock move up and then drop back down. I didn't pay too much attention to it but wish I had. Another low surfaced but I didn't see it (point B).

Top of page

Georgia Gulf: Entry

On January 28, the stock closed above a down-sloping trendline so I bought a 1/4 position in the stock the next day, receiving a fill at $5.80, shown as point D. The stock had, by this time, made an Adam & Adam double bottom (points A and B), confirmed when price closed above C. I was hesitant to buy the stock because there seemed to be overhead resistance at 6 (several candles stop at or near that value) and I thought the stock would tumble. It didn't, so I pounced.

I sold the stock at point E, 7.67, for a 3 day gain of 32%. Why did I sell? The market was up strongly today, 207 points on the Dow, and I feel that tomorrow it will retrace some of those gains. More importantly, I know that the company has an earnings announcement coming out soon (February 15), and I didn't want to give back my profits if it comes in worse than expected.

The Georgia Gulf stock on the daily scale

Georgia Gulf Aftermath

The day after I sold, price moved to a new high but closed at the same price as on the day I sold.

Days later, as the chart shows, price continued moving lower, so selling was the right choice. Price bottomed at B before recovering.

In the figure, the bought and sold arrows do not point to the prices at which the transactions occurred, rather to the days when they occurred.

In the 2008 bear market that followed, the stock continued lower, eventually trading below $1 before a reverse 1 for 25 stock split in July 2009.

-- Thomas Bulkowski

Top of page More

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com If you buy ANYTHING while there, they pay for the referral.
Legal notices: "As an Amazon Associate I earn from qualifying purchases." Paid links).

My novels:  Bedroom to Boardroom book Remember Me book Bumper's Story book Head's Law book
My stock market books:  Chart Patterns: After the Buy Getting Started in Chart Patterns 2nd edition book Trading Basics book Fundamental Analysis and Position Trading book Swing and Day Trading book Encyclopedia of chart patterns book Encyclopedia of Chart Patterns 3rd Edition book Trading classic chart patterns book

Copyright © 2005-2022 by Thomas N. Bulkowski. All rights reserved.
Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.
Some pattern names are registered trademarks of their respective owners.
Home Advertise Contact Donate Links Privacy/Disclaimer

Jimmy Hoffa Virus: Your programs can never be found again.Smiley