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4 comments:

The Banker said...

I have a question about CAAS. I've been following that stock and saw that you put it on your stocks that might break out today.

When I looked at that stock, 4 of the prior 5 days all closed on higher volume than the previous day. On the other day the stock increased in price on lower volume.

The way I read it was that the stock was being sold and wondered what about it made it trigger your possible stocks to break out today list. Was it the support at the 50 day moving average line it was nearing.

I realize that not every stock will break out but this was confused me as to why it made the cut today to watch.

Is it possible that stocks like these are being bought and sold to drive up the price let it fall and repeat?

Pradeep Bonde said...

When stocks correct or pullback, they are being sold or there are not enough buyers. If enough buyer show up the same stock will have high volume breakout and it will move up. As you pointed out the list is of "likely" to breakout stocks. Not every one of them will breakout.

Sean said...

How did it make the list though?

What is the criteria to be included on this list? Couldn't any IBD 100 / IBD 200 stock be considered "likely to break out" since by definition they are experiencing accelerating earnings / Increasing Price / Institutional Buying?

Pradeep Bonde said...

The list is based on six month momentum. See my series of posts on How to trade momentum to understand how it is arrived at.
Just because a stock is in ibd 100 or 200 does not make it a good buy.