How to anticipate a breakout on momentum stocks | stockbee

11/30/2015

How to anticipate a breakout on momentum stocks

Stocks with established momentum are the fastest moving stocks in the market. These stocks offer good   money making opportunities for swing traders who understand and develop expertise in anticipation setup on these.

Once a stock established momentum it seldom goes up straight. During its up move it will on many occasions either pullack or go sideways and rest for few days to few weeks. Then it will again breakout.

 If you can identify such stocks that are setting up for further breakout , then they give you a very low risk entry in to strongly trending stock.  If you do a good job of identifying a buy point on them and watch them closely and enter as soon as they are ready to breakout then you become instantly profitable and can  move the stop to breakeven.

The other big advantage of using anticipation setup on momentum stocks is that they allow you to plan your trade and avoid emotional trading . All the work involved in anticipation setup is much before the market opens. You identify the stocks when market is closed, study them and identify 4 or 5 best setups that have good technical setup and also have some sort of catalyst or fundamental reason to propel them forward.

For working people anticipation offer a better trading opportunity than buying breakouts. To buy breakouts you need to have access to real time scanning or intraday scanning , but that is difficult for most working people. However they can trade anticipation setups by doing 95% of the work after market close or on weekends. If you spend 2 to 3 hours identifying good anticipation setups and researching them on weekend then you have a set of candidates that  you just need to enter during the week.

This weekend I spent 2 hours going through around 600 stocks with momentum to identify the following anticipation candidates:

LNKD TPX ULTI CHDN OTIC FB CRM TRU CRAY GNCMA OC WIRE PMC WNC EEFT XIN TTI SBUX BNCN OZRK PTLA CEMI NXTM MSFT JBLU USCR RATE CHEF AUDC ATEN MCRI LFVN NGHC SYKE HSII FBIZ EDAP RTEC LEA DGII PEGA PFBC NVDA PFGC LXRX ERII OSIS EXTN HA AEIS ASGN GIMO ULTA MATX GDDY SIMO LII AAAP TYL GOOGL NVR

After that I  researched and prioritised these ideas based on recent earnings surprise, or catalyst and now have around 5 stocks that are my focus list for the week. 

If you are serious about making money trading then you can setup a simple  momentum scan to identify say top 200 stocks by momentum and then focus your attention on that. Those stocks wioll give you enough opportunities to make meaningful difference to your returns.

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