This latest rally has brought us a flurry of new breakouts. Throughout my 15 years of being in the business, I cannot recall seeing this many stocks breaking out at this rate and confirming BUY signals.
If you been working with me for the past several months – reading my reports, receiving my watch lists, you should be fully invested at this point, or at least have a good number of stocks in your portfolio.
As I mentioned in Friday’s Morning Market Update (sign up to receive those daily complimentary updates below) – We will continue not to predict and take things on a stock-by-stock basis. Generally speaking, stocks which break out with volume are BUYS, those that break down below our noted support areas are SELLS.
Here are the guidelines on how I update my trading criteria when a stock is added to my portfolio.
1st SUPPORT: is going to be the highs of the previous base, or the previous resistance. Remember, this is where you set your TRIGGER PRICE from originally. The break above that resistance was the BUY signal. As with any area of resistance – when it is taken out to the upside, then it becomes support in the event of a pullback.
2nd SUPPORT: is usually the 50-day moving average. The only time this will not be the case, is when there is some previous lows, above the 50 DMA. For instance, possibly the lows of the base. Regardless, the 50-day moving average is a formidable area of support that should always be respected.
MAX STOP LOSS: Using the formula shown in the diagram above you will set this criteria at -8% below your BUY PRICE. This is a guide, and I do not recommend setting a SELL STOP order with your broker for that price.
Here is our TrendLine Portfolio with noted support areas for each of our stocks.