Breakouts

I have tried to encourage those who have access to partake in my daily audio commentary on the website. If you have not had access to it at this point, once the new website converts, everyone will be able to partake. The reason I bring this up is that I have been encouraging everyone to trade breakouts (especially on retail...KSS, SHLD,PLCE, AEOS, ANF, OMG, etc.) since this has been the most rewarding strategy the market has offered as of late.

For those who have not heard of this strategy, you place a trade when a stock happens to close outside a support/resistance level. In this scenario, we are looking for stocks breaking resistance and moving into new highs.

The requirement other than a close above resistance is a good level of volume. Typically on breakouts you would look for better than average volume. The more volume the merrier. These are the only two requirements. In attempt to hedge the question: Yes, this means we are not using a MACD, Stochastic, or Moving Average for these. They have no relevance in this trade.

Let's throw a few more stocks out there. As of early there are a few stocks that might close at new highs today...

COH

RIMM

GS

SHLD

FTEK

Obviously I missed a few since I only spent 5 minutes looking. Make a few contributions to this list if you have them. This will be today's fishing hole for those who can't find anything going on.

how about fsh,ptv,rga

How about AXE, mcd,hog. Have retests of new support on HOLX abd FAST. Two questions: Where do we find the info on how to listen in on your audio? And second: What is proper entry? eg SHLD and FTEk closed at a new high yesterday. They may hit a new high again today, but was the proper entry using this strategy this morning, not tomorrow morning???

FLML, NFLX, KO, WWY--not all necessarily retail, though.

Better add NUE onto the list also. Big mover today!

DGIN, ascend. tri.
PRAA, ascend. tri.
SNE, decend. tri.
HRB, sym. tri.
HGT, sym. tri.
PTEN, retest decend. tri.
LGF, sym. tri.

Hey Jeff, I think this is a wonderful idea, lets all help one another, and maybe you could give a quick confirmation or no. I think this will really expedite our learning. Thanks.

I agree totally. Jeff, can you add a forum to your blog so that we can just do this every day? I love getting and sharing trade ideas.

How about DIOD, or am I seeing what I want to see?

Dan

MOH had a great breakout with a great risk/reward on an ascending triangle today. It will have to make the move quickly, though, with earnings on Nov. 7. Until you see signs of the market reversing, though, who knows? Maybe it will reach its target.

Zion - Symmetrical triangle breakout with volume

Hi Dan, I think that DIOD looks like a symmetrical triangle.

Add today's potential breakouts to the list:

CTSH
SPG
CRM
GYMB
PLCE
BNI

More potential breakouts:
ESI
NKE
HOG
XOM
JBX

How do you set a target for a breakout play? I have a method for setting bounce and pattern targets, but not for breakouts.

Mik,

Measure the pattern preceding the breakout. If it's a triangle, measure the opening. If it's a flag, measure the flagpole. If it's a rectangle, measure the rectangle. Remember, those are MINIMUM targets.

Also, HOG broke out yesterday.

Interesting strategy/approach.

Those of you who are posting comments, could you please tell me if MANH or POT could be candidates for this strategy?

Jeff, excellent blog! I would love to see your comments/suggestions on entry points.

Thanks!

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  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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