One of the favorite strategies used by traders and investors is to buy stocks that are breaking out to "New Highs" (NH's). This is especially true of those who follow the Investors Business Daily (IBD) CANSLIM method of investing. More details on CANSLIM can be found here: [CANSLIM]
Of the 300+ NH's that will be identified in tomorrow's IBD newspaper, the new high list is always interesting. However, one of the most important lessons to learn about the NH's list is that most of these stocks are extended; they are too LATE to buy.
You must have PATIENCE and wait until they pull back for a better (lower) entry price. This is often hard to do because they are "shooting up to the moon" and we want to get aboard before it is too late! So, you buy the stock and watch it turn down a day or two later.
So, what should you do? I review the stocks on the NH's list and select some to put on my "Active Watchlist" for continued following and review during the coming days and sometimes weeks. Most of these stocks will eventually retrace to between 38% to 62% from their high to an area of support based on "Fibonacci Retracement" levels. At these levels they frequently find support and turn back up for another run higher. This is the time that I want to buy these stocks and climb aboard for a possible run up to a new high. This is my time to buy!
Of the 300+ stocks that are on the current NH's list, here are some of the stock symbols that look most interesting to me: CAVM, CVS, EQIX, GIII, LOW, RCL and STZ.
Please keep in mind that these stocks are all EXTENDED. Consider putting them on your watchlist and buy only after they turn back up at support as described above.
For Novice Option Traders: If you later buy a CALL option "at the money" (ATM) on any of these stocks at the right time, you only need about a 5 point move to clear approximately 20-30-40% gain on your option. This would be worth trying/thinking about. On a 4-6 month option, you may find yourself up a good percentages in just 30-60-90 days.
Please let me know by adding your comment if you would like additional details on this subject and perhaps a video demonstrating the strategy reviewed above. Remember, this is for informational and educational purposes only; please do your own research before putting you money at risk.
Learn, profit and enjoy using the many resources available at InvestorsHELP.net.
Trader_Joe Gruender Jr.
Of the 300+ NH's that will be identified in tomorrow's IBD newspaper, the new high list is always interesting. However, one of the most important lessons to learn about the NH's list is that most of these stocks are extended; they are too LATE to buy.
You must have PATIENCE and wait until they pull back for a better (lower) entry price. This is often hard to do because they are "shooting up to the moon" and we want to get aboard before it is too late! So, you buy the stock and watch it turn down a day or two later.
So, what should you do? I review the stocks on the NH's list and select some to put on my "Active Watchlist" for continued following and review during the coming days and sometimes weeks. Most of these stocks will eventually retrace to between 38% to 62% from their high to an area of support based on "Fibonacci Retracement" levels. At these levels they frequently find support and turn back up for another run higher. This is the time that I want to buy these stocks and climb aboard for a possible run up to a new high. This is my time to buy!
Of the 300+ stocks that are on the current NH's list, here are some of the stock symbols that look most interesting to me: CAVM, CVS, EQIX, GIII, LOW, RCL and STZ.
Please keep in mind that these stocks are all EXTENDED. Consider putting them on your watchlist and buy only after they turn back up at support as described above.
For Novice Option Traders: If you later buy a CALL option "at the money" (ATM) on any of these stocks at the right time, you only need about a 5 point move to clear approximately 20-30-40% gain on your option. This would be worth trying/thinking about. On a 4-6 month option, you may find yourself up a good percentages in just 30-60-90 days.
Please let me know by adding your comment if you would like additional details on this subject and perhaps a video demonstrating the strategy reviewed above. Remember, this is for informational and educational purposes only; please do your own research before putting you money at risk.
Learn, profit and enjoy using the many resources available at InvestorsHELP.net.
Trader_Joe Gruender Jr.
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