High Tight Flag Chart Pattern And Real Examples

High, Tight Flags Are Rare

A “high, tight flag” price pattern is rare, occurring in no more than a few stocks during a bull market. It begins with the stock moving generally 100% to 120% in a very short period of time (four to eight weeks). It then corrects sideways no more than 10% to 25%, usually in three, four, or five weeks.

This is the strongest of patterns, but it’s also very risky and difficult to interpret correctly. Many stocks can skyrocket 200% or more off this formation. (See the charts for Bethlehem Steel, May 1915; American Chain & Cable, October 1935; E. L. Bruce, June 1958; Zenith, October 1958; Universal Controls, November 1958; Certain-teed, January 1961; Syntex, July 1963; Rollins, July 1964; Simmonds Precision, November 1965; Accustaff, January 1995; Emulex, October 1999; JDS Uniphase, October 1999; Qualcomm, December 1999; Taser International, November 2003; and Google, September 2004. Each earlier pattern serves as a precedent for each later pattern, so study them carefully.

The E. L. Bruce pattern in the second quarter of 1958, at around $50, provided a perfect chart pattern precedent for the Certain-teed advance that occurred in 1961. Certain-teed, in turn, became the chart model that I used to buy my first super winner, Syntex, in July 1963.