Two weeks ago I launched a new stock portfolio, Sinclair Big Growth; it has lost 3.4 percent since. While I am not happy with this result, I do believe that it is reasonable, and within the range of outcomes I ought to expect. I note that an investor buying a penny stock at an ask of $0.100 on the Tsx Venture Exchange is likely faced with a bid of $0.095: a 5 percent loss without the market moving at all! However, as I have continued to implore, all is not lost with regard to stocks. In fact, stock trading, which is at the root of capitalism, goes hand in hand with liberty, democracy, and freedom of speech; at least that's what I think.

Over many years, I have come to discover that stocks with strongly growing revenues and profits that stage breakaway gaps from price consolidations formed shortly after first being offered publicly often continue to increase in price. One fairly well-known method, cited by Investor's Business Daily, for buying breakaway gaps involves buying as close to the open price as possible, using some type of stop loss.

GOOS stock breakaway gap

Over the longer term, this method works quite well. However, over the short term, buying at the open on a breakaway gap leaves investors susceptible to being shaken out by a quick, but deep, pullback, which are almost to be expected.

On Thursday, aware that Canada Goose Holdings Inc. (NYSE: GOOS) was reporting earnings on Friday morning and watching its newly public shares start to dash toward their all-time high for a third time in a short period, I decided to initiate a 5 percent position.

Before long, my position showed a profit, so I added 5 percent, which immediately turned a profit, and then another 5 percent, which also showed a profit, and the stock was sitting at an all-time high above its IPO base on strong volume.

Holding through earnings risky

Then the market turned, as markets stubbornly do, and soon GOOS was right back where I had begun buying it near $18.50.

It took no encouragement for me to quickly, and decisively, sell the entirety of the GOOS position in the Sinclair Big Growth portfolio for a small loss. I might have held the position overnight, and into earnings, had I only been able to do so with a profit cushion. Alas.

Of course, Canada Goose reported "fourth-quarter sales that smashed analyst estimates" and gave "strong three-year guidance," according to Investor's Business Daily.

In reaction, GOOS stock staged a breakaway gap from its IPO base pattern. However, GOOS stock opened at $20.82, and quickly pulled back an almost-sickening $0.62 to $20.10, or close to 3 percent, which probably would have been enough for me to sell. Having traded more than one stock in my life, I have been presented with this situation before.

Canada Goose "smashed" expectations

Preparing myself for just such an outcome, I went into Friday morning with a good idea that GOOS stock was going to gap out. I also knew that buying at the open might be a good idea, but that it might entail sitting through a sharp pullback, which I wanted to avoid. So, I purposefully didn't begin watching GOOS stock quotes until 10:30 a.m.

on Friday, reasoning that I would rather miss another move higher than risk buying at the open and being shaken out. When I finally looked at the stock, this is about the chart I was presented with (I had to doctor the closing chart to approximate it.)

...which sort of reminds me of the art of Rick Griffin.

The stock went on to do this:

My thinking behind why this chart being is so mind-bending-ly bullish is the following: if the opening price of a breakaway gap above an IPO base like GOOS is a good place to buy, a price 3 percent lower, but still above the previous close, and previous base, is a screaming, screaming buy.

No stock analysis methodology is foolproof, but when applied correctly, the seeming breakaway gap pullback has served me well. GOOS stock is now too extended to consider buying. However, new patterns will likely emerge.

Canada Goose, CobalTech: What's the difference?

Canada Goose is based in Toronto, Ontario and sells high-quality, and high-priced, outerwear and clothing. The brand, which has roots that go back to the 1950s, has been reported by the Sault Star to be commonly counterfeited: perhaps a sign of consumer desire not commonly observed. Wall Street analysts followed by Yahoo Finance forecast Canada Goose earnings of $0.25 per share in 2017, and $0.35 in 2018. The company is expected to attract total sales of $345 million in 2018.

What is it that differentiates shares in a company like Canada Goose, which trade on the New York Stock Exchange, and, say, CobalTech Mining Inc. (TSXV: CSK), which trades on the TSX Venture Exchange?CobalTech appears to be a play both on the name of element, as well as the location where it has interests, Cobalt, Ontario. Both are Canadian companies. Both appear to be part of rich Canadian traditions.

Stock in companies without prospect of profit increases rarely advances

Profits are the biggest difference, followed by revenues. Canada Goose is expected to attract sales of $345 million in 2018; that's the average of 14 analysts' expectations. As CobalTech has no apparent analyst coverage, all investors have to go on are remarks from observers like the former chief executive officer of the firm under its previous name Big North Graphite, Spiro Kletas, "We believe that the company will be able to be milling and selling a bulk concentrate to customers in the near term," as reported by Northern Ontario Business, and reports sponsored by the company itself.

CobalTech has no revenues and no profits.

CobalTech shares have been down as much as 30 percent since Kletas' comments were published in December 2016, but have since rebounded modestly. CobalTech stock is down significantly, over 90 percent, over many longer time periods. It is not a coincidence that GOOS stock sits near all-time highs and CSK stock sits near all-time lows. Profits, and the increasing likelihood of growing future profits, are what drive stocks. Canada Goose has this. CobalTech does not.

Speck will save lives

I have gone so far as to propose that what CobalTech has sold is not actually stock, such as GOOS, but another class of equity, which I call speculity, or speck. I have made Prime Minister Justin Trudeau aware of my proposal, and I encourage all Canadians to do the same with their local members of Parliament.

I believe that this change will not only save lives, but that it also appears to have the capacity to prevent little old ladies, among others, from being fleeced, all by preventing speck like CSK from being represented as being somehow comparable to stock like GOOS.
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