How to find stock likely to breakout | stockbee

5/28/2015

How to find stock likely to breakout

Stocks in momentum phase offer good anticipation points when they pause during their up moves. For motivated swing traders this offers an opportunity to identify such stocks and put alerts on them and enter on breakout.

WWAV was one of the highlighted stock yesterday and it had a breakout during the day. If you were watching it  or set alert it offered good swing trading opportunity.


Today I have around 20 stocks in anticipation list. Out of this around 3 I am keenly watching for entries.

AST
HLTH
WUBA
SSNI
DYAX
NVIV
CORT
GLUU
NLS
ELLI
ALDW
STMP
TBI
CDK
RDUS
SABR
VMC
NSP
RNG

Above stocks have orderly pullbacks or consolidation and also most importantly they are in momentum phase so a breakout will be continuation move.

Anticipating a breakout gives you an early entry into a breakout. As my account size keeps on increasing I am now spending more and more energy on trying to anticipate breakouts and entering very close to breakout level.


In order to generate this list I use a simple 15 minute process flow. The starting point is couple of scans I run in Telechart .

DOUBLE TROUBLE 1% MOVER SCAN

  • US common stocks
  • c/minl252>=1.8 and minv3.1>=100000
  • Price % change Today between 1 to -1%

TI65 1% MOVER SCAN

  • US Common stocks
  • avgc7/avgc65>1.05 and minv3.1>100000
  • Price % change Today between 1 to -1%
After running these two scan I merge them together as some stocks will be common.Then I go through the list to find setups that are setting up for possible b/o

WHAT TO LOOK FOR IN GOOD ANTICIPATION SETUP

  • series of narrow range days in pullback/consolidation
  • orderly pullback with no 4% b/d during the pullback or consolidation
  • low volume pullback
  • low volatility during pullback
  • linear first leg if looking as continuation setup
  • Stock should go up smoothly and not in volatile manner
  • 3 to 10 days consolidation/pullback
  • not up 3 days in a row
Once a list is generated I reduce it to 3 to 5 candidates to focus on. For them I pre calculate price at which I want to enter the stocks. Then I create orders at those levels if there is capital in account for new position. Or else I create an alert.
If you want to make serious money swing trading following a simple process like this will find you daily opportunities. 

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