Look for setup like UA | stockbee

2/24/2014

Look for setup like UA


UA was one of the stocks showing up in my scans right near market open on Friday and I entered in first few minutes after open. Stock followed through to make 5% plus move.

UA is the kind of setup I look for everyday. It is a setup you are most likely to find on a momentum stock once it establishes a trend.

It is a continuation setup where a stock goes through orderly consolidation after a momentum is established. During that 8 to 10 days period you get a narrow range consolidation. The end of the consolidation is indicated by range expansion.

This setup can be traded both as anticipation setup or breakout setup. In anticipation setup you enter in anticipation of a breakout. The advantage of that is obviously you get much better entry than a breakout entry. The process flow required to find setups like this fro anticipation point of view requires setting up scans to identify stocks with established momentum and that are in consolidation. After that you have to narrow the universe down to few good setups.

As a breakout setup your signal will be range expansion. The other way to trade this setup is to put an order at breakout anticipation point that will indicate a start of new momentum burst.

In a year you can find 1000 to 3000 such setups once you understand the structural phenomenon of momentum burst.

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