Question:

What is a pennant pattern?  I thought that a flat base was your favorite chart?

My Response:

I should have said one of my favorites.. flat bases are right up there too. I dont go into these patterns in the tutorial..I’ve been meaning to add them.  In the meantime have a looks at these pages:

The pennant formation is characterized by a large volume spike in price over a few days followed by consolidation where price converges and volume diminishes often resulting in a breakout in the direction of the previous trend.  A picture will provide a much better explanation.  I’ve found a few useful links below that describe this formation.  You’ll also want to take a look at any of the past Stock Watch reports that I’ve sent you.  I usually highlight a couple of these formations in those reports.

Here’s one example from a Stock Watch report back in November:

http://www.trending123.com/patterns/bullish_pennant.htm

http://www.baresearch.com/education/technical_analysis/chart_patterns/continuation/bullish_pennants.php

http://wmt.bloggingstocks.com/bloggers/larry-schutts/

(this post looks at one stock, SPRT that I also like very much.. waiting for a break out move with volume – this pattern also illustrates a great looking pennant formation)