Harry Houdini is still one of the most recognizable names in the world.
And that’s quite a feat, considering that the 91st anniversary of his death is coming up on Halloween day.
I bring Mr. Houdini up today because when I look at our favorite Pop & Drop play – Columbia Sportswear Co. (Nasdaq: COLM), I find an eerie similarity to this great “escapesman.”
Houdini reached a certain level of notoriety with an escape act that included breaking out of handcuffs and jail cells all over the U.S. and Europe at the turn of the 20th century.
But when he upped the show-biz ante to death-defying feats submerged in diverse bodies of water like rivers and lakes to a massive, on-stage milk can, his fame and fortune as an escape artist became legendary.
The pinnacle of his escape acts involved the now-famous Chinese Water Torture-Cell where he was suspended by his feet and lowered upside-down into a glass cabinet that was locked and filled with water. The escape required him to hold his breath for more than three minutes. The performance was so daring, and such a crowd-pleaser, that it remained in his act until his death in 1926.
Houdini was known to possess an unusual amount of strength and flexibility combined with a masterful skill at lock picking that he used to achieve many of his escapes.
But to this day the exact method Houdini used to escape the infamous water torture cell remains a secret.
And that’s where his famous exits and our profitable ones part company.
That’s because I’m committed to teaching all 10-Minute Millionaires exactly how we make these profits.
And I gave you the key piece of information about our “Houdini-like” exit on Columbia back on the very first day we entered the trade.
Let’s see how this little bit of magic happened…
It’s Not Magic, But It Sure Looks Like It
After we took profits on the first half of our shares on August 1, I sent a message that we should sell the next 25% of our shares at a second profit target of $62.97 – a price it recently hit.
Let’s take a look at a chart and see why this exit looked like a magical escape:
Within two days of that exit, Columbia had pulled back by -2%.
That’s not unusual after such a strong run-up.
And our exit wasn’t “magic” – it was merely understanding how to read the probable, emotional reactions of traders and investors by looking at charts.
Our trade in Columbia was using a strategy I call Extreme Turnarounds or Pop & Drops.
These are the type of trades that move mostly sideways inside defined-reaction extremes at both the top and bottom of a price channel.
When we first entered this trade back in May, I drew those same defined trading support and resistance levels that Columbia had been respecting.
Here’s the exact chart I used back then:
You can see that the blue line showing the upper resistance level was right at $63.
So after we took our 12% profits on the first half of our shares, I told you set your second profit target at $62.97 (a 14% gain), which is just a few cents under this key support level.
That’s because price often tests (reaches a price and then retreats) an old resistance level once or twice before breaking through.
And that’s exactly what happened here.
And so the magician has revealed his “secret tool.”
Only this time, it wasn’t a lockpick to get us out of a cell.
Our tools are the tools of the trader that unlock the profit potential of stocks so we can fill up our accounts on the way to our first million.
If you took profits at either or both of these profit targets for Columbia, please send me a note to tell me how you did, and how you plan to celebrate. I love to hear your stories and look forward to reading them! All you have to do is click here.
D.R. Barton, Jr.