
Parabolic Charts
Ameet Rai
Electrical Engineer and Swing Trader focused on achieving super-performance. Through extensive studies of previous super-performance stocks and proprietary data-based research I provide guidance for new traders with an emphasis on building processes and teaching traders how to think and trade for themselves.
May 2, 2023
What is a Parabolic Move?
A parabolic move is a rapid, exponential increase in the price of a stock, which creates a curve that resembles a parabola. During a parabolic move, the stock price increases at an accelerating rate, often accompanied by significant trading volume and momentum. The move may be fueled by market enthusiasm, positive news or earnings reports, or a combination of factors.
The initial stages of a parabolic move may be difficult to identify, but as the move progresses, the price increase becomes more pronounced and the shape of the curve more evident. Eventually, the stock reaches a point where it can no longer sustain the rapid increase in price, and a reversal or correction occurs.
The reversal often is sudden and sharp, with prices falling just as quickly as they rose, leading to significant losses for investors who entered the trade late or failed to take profits along the way.
Example 1 – TSLA 2020
TSLA in early 2020 is a classic example of a parabolic move. Tesla’s move initially started from a large gap-up on volume following a strong earnings report, leading to a steady uptrend. As time progressed, the rate of change increased exponentially, leading to a climactic peak.
From the initial gap-up day to the peak, Tesla made a 223% move in 103 days. The stock’s price then quickly plummeted, round-tripping nearly all of the gains it had previously made.

Example 2 – TLRY 2018
Another perfect example is TLRY in late 2018. The move was driven by multiple factors, including positive news regarding the legalization of cannabis in Canada and other countries, the company’s recent IPO, a short squeeze, and general speculation and hype around the cannabis industry.
Investors/traders believed that cannabis stocks would experience explosive growth in the future. All of these factors led to Tilray’s outrageous 1392% move in 62 days.

Spotting The End Of A Parabolic Move
When the stock’s parabolic advance is near its end, there are specific warning signs that the move is coming to an end. Some of these signs are:
- Largest up day since the beginning of the move
- Widest daily bar from high to low
- High-volume reversal bar
- Multiple large gap-ups
- Largest volume down day since the beginning of the move
- Railroad Tracks topping pattern
In TSLA’s case, it was an exhaustion gap with a high-volume gap-up with a weak closing range. For TLRY, it was the stock’s largest gap-up as well as a climactic, high-volume reversal bar.
Example 3 – QCOM 1999
The last example is QCOM back in late 1999 during the dot-com bubble. The stock’s massive move was driven by the company’s strong financial results, including outstanding earnings and sales growth, as well as its leadership in the production of wireless communication technology, a sector that was experiencing tremendous growth with promising future prospects.
Add a short squeeze on top of that, and from its initial high-volume gap that started the move, Qualcomm increased 221% in just 61 days.

There were 2 signs that an impending top was coming on Qualcomm, with the stock experiencing the largest up day on a gap, then a high-volume reversal day.
This led to the stock immediately round-tripping the gains it made during the last part of its move, then over the next few months, giving back all of its gains.

In conclusion, parabolic moves are a double-edged sword that presents massive opportunities for both the long-and-short side if identified and managed correctly.
If you’re interested in learning more about parabolic moves and how to recognize them early on, as well as when they may be nearing their peak, we have a free 50-page model book to give to you!
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