Encore, Encore
People often ask me how many times I will trade a
breakout on a stock. I respond with, “until it stops breaking out.” It just seems
so logical. Let’s look at a few examples of such setups.
Today’s Watchlist:Â
(
SUNW |
Quote |
Chart |
News |
PowerRating),
(
BAX |
Quote |
Chart |
News |
PowerRating),
(
BRCD |
Quote |
Chart |
News |
PowerRating)
Sun Microsystems
(
SUNW |
Quote |
Chart |
News |
PowerRating) is a
perfect example of a repeat breakout. Each week SUNW has been hitting new highs,
but each week, it has been setting up as a new chart pattern. This week, it is
consolidating just near its current all-time high. Again, watch for a closing
move above this key level followed by a continuation on the next trading
session.
Baxter International
(
BAX |
Quote |
Chart |
News |
PowerRating), the
generic drug maker, is also consolidating once again near its all-time high.
Like with any consolidation, we will watch for a closing move outside of the
range. Normally this pattern has no directional bias, but the trend overall is
up, so we will watch for a move in that direction. Volume has traditionally been
strong on big moves in BAX, so it is logical to expect a similar move during a
breakout.
On the intraday charts, I see Brocade
(
BRCD |
Quote |
Chart |
News |
PowerRating) has formed an intraday cup formation. Daytraders should
watch for a closing move above the morning high on the five-minute charts,
followed by another leg higher. Many breakouts have been failing, so use caution
in this choppy market. If this breakout fails, or you miss it, watch for an
intraday cup-with-handle to form.
Until later,Â