Stock Breakouts Q&A   View Select Entries from Our Mailbag. Also See Our Q&A Page.

Q: I am a new subscriber and am trying to accustom myself to your site. On the stock breakouts, you advise not to buy if the stock has run more than 5%.

By the time I get the email, these stocks have mostly seemed to run 10-15% or more.

Any tips?

Also: in the above case, would you buy the stock when it pulled back from the initial breakout?

And as to your last pick ****, it has gone nowhere since you bought it; it traded down. As a subscriber (and in general, not necessarily specific to ****) would that be an opportunity to buy, or would you consider that to have been weakness that would negate buying?

Thank you

A: Hi,

It is very important to buy the stock breakouts as soon as they happen. Sometimes, the breakouts will take the stock to within 5% of the pivot point or previous high. Many times, specially on huge stock breakouts, the breakout will happen before you or I will be able to catch it. In such a case, it is important to still buy, even if a slight run-up of +10% has happened. Depending on the quality of the breakouts (tight base, good volume on breakouts), we will get in, even if it means a slightly higher stock price. See the recent stock breakout on Sonic Solutions (SNIC). This stock went on to a 75% gain from the breakout point.

We have a Stock Breakout Section on our Daily Report, which you can receive hourly during the trading day. There should be no reason to be late by 10-15% on the breakouts, unless the stock went up this much within an hour or so. If we missed buying on the breakouts, then one could purchase on the pull-back provided the pull-back came on lower volume, and did not retrace more than 50% of the breakouts move. In most cases, we buy the breakouts, even if we have to pay more.

**** is still holding up well in our database stock ranking. The stock chart pattern is still very healthy. We have high hopes for ****. One could consider buying, if the price action still shows accumulation and not distribution. See a daily chart, and try and observe the up volume to down volume in the recent days or weeks after the stock breakout. That will provide you with some clues as to whether to buy or not.

Hope that helps.