Simon's (and everyone's) Breakout Thread II

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I wanted to get a fresh start on this thread and clearly state my intentions for any stock I put on my watchlist here. Here is my criteria for starters:

-Breakout patterns: flags, pennants, triangles, cup and handle, etc.
-Ideally the patterns will be forming/ consolidating right below/at/above some long term resistance or support (for shorts).
-Other indicators for confirmation will be volume, RSI, MACD, and other magical wizardry.

Here is my disclaimer. This thread is most definitely not investing advice. This is a watchlist of stocks that I think have a fairly good chance of making a move after/if they break resistance. I will try and post the area I think is resistance/ (a.k.a. the breakout point). I wish there was but there is no scientific method to playing breakouts. Ideally you have your resistance price and you wait for it to break that, at which point you buy and ride the wave up. The problem is if you wait too long you might have a hard time getting filled as there should be a good amount of buying (hence the breakout). So the answer is easy, buy early! But wait. At that point you're buying in at or right below resistance which usually is a major no-no, unless you believe there is enough buying going on that it will break through. Another factor is that the resistance isn't always exact, it's sometimes more of a range. You just have to use your best judgment along with a helpful indicator, volume. I like having a 15 or 30 minute chart open and I'll watch for any spiking in volume while it's testing resistance.

Summary: I'm watching these stocks for a break of a fairly precise price point /range with confirming volume to go along with the move. The old resistance point becomes my new support area and I'll generally set my initial stop loss right below that. If it does make a move initially, I can sell a portion. That way even if it comes back below support and it hits my stop loss, I still make a little profit. My risk is low with this type of play as I only buy in if it makes a move and if it fails that new support, I have a tight stop. If a stock doesn't ever test/break the breakout point or it just gaps well above it, I just don't play it.

I'll try to post the resistance/breakout point in red above all my charts. Obviously if anyone has a breakout chart they want to share with the class, please do so. Any questions, just ask.

.52-.535 Still holding the flag pattern and the 200 ma


.12 -Low volume penny stock


.19 -Super thinly traded stock. Nice setup though so it's worth keeping an eye on. Be extra cautious when trading thinly traded stocks.


2.7


1.04





Short
9.97 (there is a wick down to 9.78 though) Bearish breakout play. Looks like a head and shoulder pattern on the 30 min chart.

Thanks for the compliment.

I will look at intraday charts sometimes for nice little setups for a daytrade. For penny stocks that made a big move in the a.m. I'll watch for a flag or other consolidating pattern to catch the second move up (I like using a 5 minute chart in this instance).

The 30 or 60 minute charts come in handy for me when I'm watching for a breakout on a daily chart. Let's say there is a nice flag developing on the daily chart. I'll start watching it in a 30 minute chart and I may notice a triangle pattern forming on that. Anytime you have a pattern developing on a 30 minute chart and the daily, you have a great chance of a breakout.

1.5 Testing resistance at the moment but the volume is tapering down. You always want to play a breakout with strong (relative) volume, so I'm waiting to see if it picks up again.

Hey Jessica, thanks for stopping by. Be sure to check out this thread, especially when the market turns back up.

On that note, I wanted to mention something about that to everyone. Breakout plays, along with any other type of setup play, work in cycles or phases. When the market is really bullish, bullish breakout patterns are very reliable. Generally during a bull market, if you catch one moving you can hold for a few days and make good profits. Lately with the market being more bearish and indecisive, these breakouts won't be as effective. What I do then is start looking at more bearish breakout plays and I'll play the bullish ones a lot more conservatively. I'll be extra selective in playing them and I'll take profits much more quickly. Don't give back all your profits from a bull market because you're being stubborn. Be aware of these cycles and work them too your advantage, or at least don't let them burn you. If you're adamant about playing strictly bullish breakout plays then it may serve you best to just take time off from trading when the market isn't favorable to them.

1.33 Just looking to scalp this one at the moment, that is unless I see some heavy buying volume come in.


Already broke resistance Could be a good entry in the $1 range if it pulls back, otherwise you could try to play it as a continuation on a break of Friday's high (1.1).


.88


1.5 I've posted this probably more than once already but it's never broken resistance. It has been forming higher lows though.


.25 I like the setup but I'd need some volume confirmation. Thinly traded stock I'd only throw a little bit of money at if I did play.




Still Watching:
BMGX .52-.55 Still holding the flag pattern and the 200 ma. Looks to me like heavy accumulation the last 2-3 weeks.

JLHY 1.04 True it closed at 1.05 (above the breakout point and at a new 52 week high) but the volume didn't convince me to get in yet. Watching closely.

.32 Testing that resistance at the moment.

That's about as nice as they come.

I didn't find one nice long setup tonight, though I have a couple that already made a move and I'm watching. No long setups means I'll be looking to short tomorrow.

Shorts

1.09


2.0


2.75


5.34


6.47


6.97


8.83


8.96


10.5


11.49

More shorts

4.37


4.4


4.88


4.97

Just like you'd wait for resistance to be broken (with volume) on a long breakout play, you need to wait for support to be broken on breakout short plays too.

.58 Broke resistance with pretty nice volume, now have to see if it holds and the buying continues.