How to use anticipation to get in to breakout early | stockbee

2/08/2017

How to use anticipation to get in to breakout early

CENX is an example of  stock with momentum that was setting up for possible breakout for some days.


Stocks with momentum like CENX go through orderly pauses during there up moves. An anticipation scan can help you find such stocks and enter as they are breaking out. In case of CENX it had established momentum . It had 10 days of sideways consolidation. I entered the trade in anticipation of breakout between 15.60 and 15.75 with a close stop at 15.43. Stock subsequently had a breakout and at one stage was up 7% before fading a bit as market faded. 

To find momentum stocks setting up for breakout one has to first scan for stocks with established momentum on either quarterly, half year, or yearly basis and then look for periods of low consolidation on those stocks. I do that by looking for a stock with between 1% to -1% price % change.  From a wider universe of stocks that meet the scan condition I create a watchlist to track for next day. For example this is the list I shared today that I am watching. 

All these stocks have some sort of pullback or pause in trend and they have momentum and capable of making explosive 8 to 20% or even bigger move in 3 to 5 days if they breakout.

While anticipation is one of the ways to get in to moves early , not all moves you can  anticipate. So I also focus on breakouts. Breakouts setups on stocks with momentum offer you a way to participate in a fast part of a swing move. 

These are moves of 3 to 5 days where stock make 8% to 20% move or 5 to 20 dollar moves. NVDA is a example of recent trade like that. 

NVDA is a stock with strong momentum for over a year. Stock had a correction post earnings rally. 6 days ago it showed up in 4% breakout scan I use. I entered on that day and stocks made 10% move in 5 days . I sold yesterday on gap up move. The stock has earnings due this week so risk increases if you hold it through earnings. 

Some of the stocks showing up in the breakout scan:

Bullish Breakouts: NFLX IBM IRTC
Bearish Breakdowns: FGP RYAM FOSL DEPO EBS FMC CTB CVX CRC HQY MSI





3 comments:

Alex B said...

Thanks , fun, trading her from 2016

FX Crusader. said...

Hi stockbee, do you trade NYSE or Nasdaq stocks ? Or focus on Nasdaq stocks only ?

Pradeep Bonde said...

all