Wednesday, July 4, 2007

Going Long - RRI - Darvas Box Play

We found this stock in March and the chart looked good. To be honest, I can't remember how we tweaked the filter, but we found it by tweaking this filter on the first GOING LONG post with good volume and price staying above the MA(20). I think we liked this one since it had huge volume and was up around 50% in 6 months.

Anyway, we decided to buy it and play it with a modified Darvas box strategy. Meaning average up if the price continues to make new highs. (Apologies to Nicholas Darvas for my oversimplification, it's been a long time since I read his book.)

We bought 100 shares on 03.19 at $18.85. The prior close was $18.84 so we set the next box top at 10% over that, $20.72. When it closed above that on 03.22, we bought another 100 shares at the open at 20.12 (just luck on that entry due to a gap down that morning), and so on. We are now long 400 shares. Closed over the box top at $27.95 yesterday, so will buy another 100 at the open tomorrow.

Mental stop of 8-10% on the average share price. Up 28.4% in 3 1/2 months on the average cost of $21.77. Nice.


kc said...

VDSI really looks like a Darvas box formation. Check it out!

Laura said...

I like VDSI too.

If you care to, draw the boxes the way you see them, and e-mail the chart to us. We'll be glad to post your take on it. I just don't have the time for all of the good ones out there!

Anonymous said...

For the people who don't know what is a Darvas Box (link):

This is the method Muddy was taught by his uncle at a younger age.

Tradestation 2000i/Newer Version.


Laura said...

Added 100 shares at 27.85 on July 5th. New box top $30.75.

Friday closed at $28.14. Long 500 shares, average cost $23.00.

Laura said...

Forgot to say, protecting profits now with 8-10% mental stop.

Anonymous said...

Darvas Box