Will Keith Fitz-Gerald’s “X-Pattern” Drive this Stock Up?

Checking out the new teased stock with the "X-Pattern" stock chart, teased by Money Map's High Velocity Profits

By xiexgp@gmail.com, March 16, 2015

“I’m going to make a $1.95 million bet.

“You see, over the next few minutes, I’m going to show you a simple pattern I believe will allow you to achieve two incredible feats…

“You could capture a series of 164.68% windfalls, and…

“You will, with 100% certainty, only buy stocks that are going up.

“At its core, all you have to do is just grab regular, ‘boring’ shares of stock when you see this X…

“And sell them when you see it again.”

That’s the lead-in to the pitch for Money Morning’s “X-Pattern” trading idea — Keith Fitz-Gerald says he has found a “simple pattern” that will let you capture a series of windfalls and “with 100% certainty” only buy stocks that are going up. Pretty strong words. And he’s using them to sell a trading service that he calls High Velocity Profits.

And I’m not going to explain the X-pattern in detail for you here — I’m not a chart-trading expert, it looks like he’s using (at least in part) something called the Aroon indicator, which is a trend indicator that you can see described here or here,it basically measures the days since a high (or low) price was hit and gives buy (or sell) indicators when the “days since a high” indicator crosses over (or under) the “days since a low” indicator.

If you see “AROON 25” it means they’re using 25 days as the timeframe — so a stock would be at 100 on that indicator if it just hit a 25-day high (or low) price, or at 0 if it has been below the 25-day high (or above the low) for 25 days. For a lot of stocks, these lines will cross frequently — for some that are consistently rising or falling, they might not cross in a year or more.

Trend-following has certainly led to lots of huge gains over the years, particularly for those who can buy on the way up and sell after it starts to go down and do so consistently over time, and there are hundreds of indicators and strategies that trend-following chartists use, and variations on all of them (what time period you use, what but it’s far from being my strength or area of interest. I don’t know whether the AROON indicator (or oscillator, which visualizes the data differently) will work better than any other charting indicators at measuring the strength or direction of a trend.

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So why do I mention it today? Because today I saw an ad from Keith Fitz-Gerald that said he just had a new indicator triggered last week, a new “X-pattern” on a stock that you should buy. So that I can sniff out for you, and we therefore get an actual stock to talk about and, for those who want to test this “X-pattern”, an example to consider.

Here’s how he put it in the email:

“Below is a stock chart for a company based out of Rochester, NY.

“As you can see, over the past few weeks it has fluctuated wildly.

“However, I believe I know exactly where this stock is going next – and that you can make a whole lot of money from it.

“In fact, I’m so confident that I’m putting $1.95 million on the line.

“You may think I’m crazy for doing this.

“But I’m not. You see, my team has spent the last six months investigating a single pattern that has been appearing alongside two to three stocks a month… every month… going all the way back to the bursting of the dot-com bubble, through the recession, all the way up to today.

“And it was spotted with the company in this chart.

“This same pattern has been detected with some of the market’s most exceptional windfalls, like 7,476% on Monster Beverage, 2,941% on Terra Nitrogen, 2,566% on Kingold Jewelry, and 1,478% on Radcom.”

I didn’t copy the chart, but I did check it to confirm — the stock he’s talking about here is Paychex (PAYX). The stock chart is an exact match, and it is a Rochester company. The AROON indicator for PAYX may have crossed on the bullish side over the last couple days, but if so that would mean you’re using a very short-term version of the indicator (like 15 days or so) — and if that’s what you’re using, then the up/down “X” of the crossing indicator would have happened a dozen times or so in the last six months. If you’re using a longer-term AROON indicator, like 25 days (which most of the chart systems default to) or longer, then PAYX has been in a positive trend on AROON for a month or more after doing a bit of back-and-forth crossover in January and early February.

So what does that mean? I have no idea. PAYX is at a 10-year high — so it doesn’t take a wizard to note that the trend is positive, but it might take an expert technical trader to get you in and out of bumps up and down over the next couple years. PAYX is, like its larger rival ADP, quite expensive and priced at a stiff premium to its growth rate. This is an HR outsourcing company, in case the name is new to you — they handle benefits outsourcing, HR, and payroll processing, particularly for small to midsize businesses who might not have big HR/Personnel departments. What will drive PAYX is the same thing that will drive ADP, broadly speaking: Employment and job creation, labor-law complexity, and short-term interest rates.

To simplify: If employment rises, they’ll collect more fee income for running payroll for their customers… if it becomes more complicated to deal with payroll laws and regulations (as with health insurance handling and tax law), they’ll get more new customers who want to outsource some of that headache… and if short-term interest rates rise, they’ll earn much more money on the brief window of “float” that they get to hold during the paycheck-generating process. (Like ADP, they collect money from the employer a day or two before it’s actually sent to the account of the employee or printed on a check, and earn some return on that money — or at least they did, when there was any money to be earned on very-short-term interest rates… even with low rates, though, that fund is more valuable than it might seem, because, like Warren Buffett’s famed insurance float, it refills itself every day with new employer money even as it disburses itself to the employees so you can, if you wish, consider it more of a steady asset to earn on than a liability to pay out. Like a dammed pond — it lets water out through the sluice every day and new water comes in every day, but the pond’s depth usually is pretty reliably within an expected range).

So with employment trends certainly improving (more people working), and with short-term interest rates widely expected to rise, there’s quite a bit of optimism baked into PAYX. Maybe that’s as it should be, I can’t claim to have have researched the company thoroughly — the twice-as-big ADP is similarly valued at about 30 times earnings (and is at all-time highs), but PAYX is generally more profitable (it’s a less complex company, they don’t offer as many different services even though both are huge in payroll processing)… and both are expected to grow earnings at a 8-10% annual clip, which is phenomenal for a $20-40 billion company but not that exciting for a company valued at 30 times earnings. They’re also both being bought as “dividend growth” stocks — PAYX has the somewhat higher yield (3% versus 2.25%) and the less-perfect record of dividend growth (PAYX has paused their growth a few times and is a younger company, ADP has raised the dividend every year for 40 years now).

And yes, Paychex (PAYX) and ADP (ADP) have been generally stronger bets for far longer than the “upstart” HR outsourcing/payroll companies that have come public more recently, particularly those who use the word “cloud” in every other paragraph like Paycom (PAYC) and Workday (WDAY). I don’t know if that will continue or not, but so far investors have generally been better-rewarded by the established firms that are actually profitable.

We’ll open the week with that — what do you think? Is PAYX a buy either because it’s in a strong and positive trend or because you like the business? Have any interest in or expertise with the AROON indicator or other charting tools Fitz-Gerald might be using to identify his “X-Pattern” stocks? Let us know with a comment below…

(Our readers had some discussion of this “X-Pattern” a few weeks ago when it was first touted by Money Map, so I’ve appended that discussion they had to the end of this article to get you started. Enjoy!)


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Travis Johnson, Stock Gumshoe
Admin
๐Ÿ‘11593

Travis,
Wondering if you or anyone from the forum heard of a system called X pattern by Keith Fitz-Gerald he warranties 30 winning trades for the first year, the subscription costs $1950.

Thanks for any input

Javier M.

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frank
Guest
frank

very expensive as usual, they are the ones who make all kind of money, for us we have to be careful.

modernrock
Irregular
๐Ÿ‘236

new service, no track record. creative writing used.

Roger
Guest
Roger

It looks to me like its a very expensive service for how to use the techinical indicator otherwise known as AROON

modernrock
Irregular
๐Ÿ‘236

very nice sluething, had to look that one up!!

gr8newz
Irregular
๐Ÿ‘10
gr8newz

Thanks, Roger. Do you “use” the AROON indicator? If so, is it helpful and where do you source the graphs?

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gr8newz
Irregular
๐Ÿ‘10
gr8newz

After a bit more research on my own, the AROON indicator is available on stockcharts.com

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cutaboard2
Member
๐Ÿ‘8

It is also on Think or Swim, TOS

hiinlane
Member
๐Ÿ‘1
hiinlane

any ideas what are those two stocks they are teasing?

Ed
Guest
Ed

CMTL and CTCT, neither are doing well!

David
Guest
David

How do you know those are the two being touted?

Ed Ross
Guest
Ed Ross

Unfortunately, I bought it and can’t cancel out.

canonfodder
Member
๐Ÿ‘82
canonfodder

I bought and then after a short time asked for and received my money back. The stocks touted at that time were the CTCT and CMTL. So I can assure you that they are the stocks.

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Gary
Guest
Gary

I was lucky enough to get a refund but lost several thousand on their trades. Well at a least a couple on their PZZA short. I’m still holding CMTL which is rebounding some. Just buy some UTG and forgedaboutit.

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Dave
Guest

Edward,
Had more than 30 days gone by when you got your refund?
This high Velocity subscription is a complete rip off.
None of the stocks have done anything yet. In fact he already advised to sell CTCT and CMTL. Other stocks recommended since have done nothing, including PAYX.

jon smith
Guest
jon smith

it is a complete rip off. 6 of first 7 trades were losers. he blames on a “bearish” market. Funny thing S&P is up 2% since they started. Plus they got one rec wrong – said to buy a put on spxs only to send an update saying it was a mistake and should be a call.

shatkosky
Member
๐Ÿ‘2
shatkosky

His tout today is for a high tech medical company and a manufacturing company. Neither of these appear to fit either descriptor.

Gary
Guest
Gary

Yes two of them were (long CMTL) which was doing Ok until earnings where they dropped about $6 bucks over a few days. One other was a (short on PZZA) using options . I lost more on both trades more then the price of the subscription which I canceled while I could still get a refund. I’m still holding CMTL which is recovering some and it does pay a nice dividend so I figured I would give it some time.

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rlouisa
Member
๐Ÿ‘1
rlouisa

You need to know 30 out of how many touts. 30 out of 100 won’t do anyone much good.

iltrus
Member
๐Ÿ‘61

They say they will tout 2-3 buys per month. This means they promise 30 winners out of about 36.

joan_in_houston
Member
๐Ÿ‘26
joan_in_houston

I listened to their spiel one evening recently. They advertise that their product has been extensively “backtested.” I cannot tell you how many times I have been shown this-and-that which has allegedly been “backtested.” The confidence I have in so-called “backtesting” is less than ZERO. Written by a grey-haired investor! (And they go on to say that their system is “guaranteed” by which they mean if you don’t like it, they will give it to you for free during the second year. Ugh!!)

ggswift
Irregular
๐Ÿ‘103

These stocks appear to have good Aroon Oscillator Charts : BCC GNVC JOEZ NUS NXPI ONNN SDRL TW VRX VTG WAL CODE Will they make you any money………God only knows !

Here is the link for the Stock Charts Aroon Oscillator http://scharts.co/1DtEjfW

What stocks can you find?

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David Schultz
Guest
David Schultz

One more click on the Stock Charts chart of CODE showing the Aroon Oscillator will give you a P&F chart showing a bullish price objective of 74.5 with a current price of 38.59.

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mgm1
Guest

Strange that it’s no longer trading on Tradestation (NYSE feed). Had to enter a ‘!’ suffix to even see it. Trading stopped on 3/12. Might it have completed merger (e.g. new ticker)?

Gr8Full!
Member
๐Ÿ‘11348

CY x-code – SAN FRANCISCO (Standard & Poor’s) March 19, 2015–Standard & Poor’s Ratings Services said today that it withdrew its ‘BB-‘ corporate credit rating on
U.S.-based Spansion Inc. given that Cypress Semiconductor Corp. has completed
its acquisition of Spansion and repaid all debt in full. We also withdrew our
issue-level ratings on Spansion’s subsidiary, Spansion LLC.
Best2ALL!-=Benjamin

Javier
Guest
Javier

Thank you the information Gerald. Very very useful before start considering to pay their fee for a public information.

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Javier
Guest
Javier

Stocks that I found that could be a potential bet are: BABA, AAPL, AMBA, TSLA, F and AMBA.

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Raimundo
Guest
Raimundo

Any idea of the optimal “parameter” (i guess it’s the number of days) for the Aroon?
Thx!

Guy Smith
Guest
Guy Smith

Don’t forget the correlation of the Piotroski F-Scores, which are also public info. There are several sources, but I Googled “F-score” and ran across this link – http://www.grahaminvestor.com/screens/piotroski-scores/. Nice feature here is that the F-Scores are ranked with highest scoring companies getting a 9. I assume that correlates to the ranking system Money Morning discusses in the video.

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DASmith
Guest
DASmith

Thank you for mentioning the Piotroski score–this is not just a chart tracking service-it only recommends stocks that score an 8 or 9 on the Piotroski score. Which evidently shows high value companies that are worthy of our attention.

AllanTrends
Irregular
๐Ÿ‘74

This piece caught my attention since some of what was in the initial tease sounded very close to my own trend following system. Fortunately, this $4K hustle has virtually nothing in common with systematic trend following. If you read through the very lengthy description of the “X-Pattern” methodology he makes it clear that it works “100% of the time…” but then later on in the long description he adds the caveat, “…on some stocks.” How do you know which stocks it works on? You look back in retrospect, “Ah, those are the ones it worked with.” Putting out a trading… Read more ยป

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Paul Bormann
Guest
Paul Bormann

Good point, Allan, especially your last one. Sharp people do develop stock trading “systems” that do work for a while. And they do use them for their own benefit until the market adjusts to neutralize their angle. At that point their system no longer works. Then they start peddling their system, with it’s past impressive track record, to unsuspecting, less sharp people to make the last few $100k off them.
And back testing means very little unless they have a way to buy those stocks retroactively!

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Island Trader
Guest
Island Trader

The use of oscillators such as this AROON is extremely common for floor traders to identify potential “Buy” and “Sell” price targets. Two of the most reliable are the Slow Stochastic or SS, and the Relative Strength Index or RSI. They work very well provided you do not try and emotionally second guess them. I use StockCharts every day to monitor my portfolio of stocks. Otherwise, when do you decide to buy or sell a stock? It works. I am not sure about the Aroon oscillator, but I will test it. The key is indeed knowing how to set the… Read more ยป

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cmessinger
Member
๐Ÿ‘2
cmessinger

Hi Island!
I’m new to charting. Just wondering how may days you set for SS and RSI??
Many thanks,
Cyndi

Paul Jessup
Guest
Paul Jessup

No trader I know uses any indicator at all. They might possibly use point and figure charting instead of bar or candlestick charts. The best ones don’t even need charts. Overbought or oversold markets can stay overbought or oversold for a very long time. Moving averages, pivot points, and so on may or may not hold as resitance or support. Two standard deviations using Bollinger bands may or may not work, but there is nothing stopping the market going out three or more standard deviations, or not reaching two standard deviations at all. No volatility – no good. Tips: 1.… Read more ยป

Alan Harris
Guest
Alan Harris

9: Toss a coin?
TMI I fear. Take this post apart one point at a time and it will sound like a master class rather that a ‘Take it from me’ directive lecture.

Paul Jessup
Guest
Paul Jessup

I had to look up what TMI means in the world of social networking. That is not in my area of expertise I’m afraid. With so many posts to your credit, you may well be able to give a master class in that.

Are you going to be the first to refute my posts, Alan? If you do not agree with my points that is fine by me, as I always need counter-parties to trade with in order to make money.

Alan Harris
Guest
Alan Harris

Paul: Far from it. Im totally sure you have a great deal of knowledge and experience that others (especially me) would benefit from. But its the nature of thread posting that theres never room to go into any meaningful depth, so the bullet points appear like 8 commandments from the gospel of St Jessup. Im hoping youre an Irregular (if not, join: the best investment advice I can offer anyone at $49pa !). Id love to ask you some questions, initially @ http://www.stockgumshoe.com/2015/03/microblog-kss-club-house-for-the-discussion-of-religion-politics-and-other-unmentionables-volume-3/ .GL

Cathy
Guest
Cathy

Excellent : I am sure that made Keith’s day and he was happy for your support. That $1950.00 could make a lot of X’s so you have made many happy and 1 not so happy. I am one of the many. I can’t figure out why anyone would do the $1950.00 when they can get the Gumshoe for the best deal ever or they can get the Gumshoe top of the line for the best deal ever and also get an education in many ways, GREAT WORK KEEP SHINNING!

frank
Guest
frank

you are right, this guy is really really helping helping us all, and I want to say thank you.

Paul J
Guest
Paul J

I bought into the hype and purchased the program. You are all correct, it uses Piotroski score he modifies and an optimized Aroon indicator. I could tell within a week , it was a waste of money and asked for a refund. Money was refunded.

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Dennis R
Guest
Dennis R

Paul.
Just curious. Did you ask for refund because you thought the system would not work for future stock picks or because you were confident you could reproduce the results on your own without the $2k fee. Thanks.

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leskellum
Irregular
๐Ÿ‘7

Just wanted to thank Travis for an excellent article and Gerald and Guy for their excellent inputs also. Very helpful.

Daniel Kahraman
Guest

D.I.Y. Aroon Oscillator and Aroon up/down

Daniel Kahraman
Guest

http://investexcel.net/calculate-aroon-excel-vba/

Daniel Kahraman
Guest

Download Excel Spreadsheet to Calculate and Plot Aroon with Connectivity to Yahoo Finance

paulrossi99
Member
๐Ÿ‘0
paulrossi99

I did but cannot change the sample “google” parameters

TimothyJ999
Guest
TimothyJ999

Strange, mine worked fine–I was able to download the spreadsheet, change the ticker and period, click the “Get Data from Yahoo” button, and it all updated correctly. I’m thinking you may have some Excel security features enabled that are preventing updates.

Frank
Guest
Frank

If market is choppy like the last few days (weeks) , I am not sure it will work well. That is why the trades are not all working out. Look carefully at the stocks you are putting the money on. I think Volatility will kill the trade.

David Paton
Guest
David Paton

Ignore this system and look for the next Dr KSS article! I am doing extremely well using three of the companies he reviewed (FLKS, ESPR & ZFGN)! A retired Pharmacologist.

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Krystyna Boron
Guest
Krystyna Boron

As do I – Dr KSS is amazing.

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Alan Harris
Guest
Alan Harris

Costs a whole $49 pa and youre ’50/50′ guaranteed to earn that back in 1 day. Plus you get all the beans from Travis. (no Im not on commission, just trying to be a friend to those Gummies (like me) who have bought into $2k pigs in pokes in the past.)

DASmith
Guest
DASmith

looks like flks just dropped $3 in the last 10 days or so…from 23 to 20.26

DASmith
Guest
DASmith

espr went from 110 to 90–hope you had some put options on that one..

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DASmith
Guest
DASmith

zfgn went from 46 to 40.56 so far today (last 5 days) – market is indeed “toppy”!

DASmith
Guest
DASmith

Exactly right–the stocks being recommended are excellent picks (base on Zack’s ranking system). However, this market is a bit “toppy” as Keith mentioned. Who knows, it all may collapse as Harry Dent keeps forecasting based on demographics, etc. We’ll see how it goes—

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DASmith
Guest
DASmith

I meant this as a reply to Frank

Daniel Kahraman
Guest

It’s best to use several technical analysis tools. Aroon seems to be a bit of a laggard so I suspect Fitzgerald has “doctored” his charts.

bob b
Guest
bob b

think Bre-X
?? !!

Ric M
Guest
Ric M

I think they backtested until they got an optimal Aroon that produced many winning trades. They also may have cherry picked which Aroon Xs produced the best results stock wise. Aroons do not always produce consistent winning trades or they produce so many X’s that the trading costs would eat up your capital like Pacman.

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Denny
Member
๐Ÿ‘64

I am with david. Long dr. Kss.

Pay chex is an outstanding firm. Did quite well over the years. Good management and direction.

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mgm1
Guest

3/22: $PAYX seems very extended at the moment. Best to wait for pullback to support befo