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Depends.; I grab a weekly chart and look back 5 yrs. Longer until I find an all time high.
What it depends on is the catalyst. Why is the stock breaking out now? What's new? Management, product, merger or is there any reason for the renewed interest.
I also look at where and how long price traded at former levels. What is the likelihood of trapped buyers waiting to get out at breakeven or panic if the price drops as it did in the past.
If you buy stocks breaking out to new all time highs it is one less thing you have to worry about.
"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
@deaddog took the words out of my mouth with his response. ATH's preferred. The longer ago prices were traded the fewer open positions will remain from those prices. The more compelling the change in the company the more likely it is to attract new money which overwhelms the 'overhead supply.'
Stopped on my remaining TSLA trailed stop around breakeven this morning. Not a great sign for the market though to see such a heavily watched stock and barometer for 'growth' slice back through the breakout level from last week.
I didn't buy anything because I've seen no improvement in conditions. Here are breakouts I recorded as buyable today if market conditions were good:
BILI
CRWD
VCEL
ALGN
FUTU
VSTO
TRIP
As of the close 5/7 are red - failed breakouts are not a good sign. I'll continue to watch the recent breakouts and wait for the tides to shift before making any large commitments.
I took a quick look at the symbols above and with a couple obvious examples didn't see what I would call breakouts. Only VCEL didn't have overhead resistance.
How many checked all the boxes?
Market was down today. I don't usually buy on days the market is down. Swimming against the tide.
"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
Haha. That’s the opposite of what @Schnook does. He said he doesn’t buy stocks when the market is up because most stocks drift higher when the market is up. When the market is down and an individual stock is up it’s showing relative strength.
That’s what is funny about this game - two traders can do OPPOSITE things and both can logically justify their choice!
All of the tickers mentioned checked my boxes for entry. Some I’d consider higher quality than others, but all were good enough to take in a good market.
Nothing for me today. Stopped on ON and SONO. Down to three remaining positions and about 15% invested. Keeping the gunpowder dry until the next opportunity comes around.
Here are the boxes I like to see checked. I would prefer to see the stock breakout to new all time highs and should maybe add that in but I do some bottom fishing.
"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
I imagine my criteria will become more and more selective as the years go by. 80/20 principle is relevant here I think. 80% of a trend-follower's gains will be made on the 20% or so trades that are ideal opportunities (such as those that check all your boxes) while the remaining 20% gains will be made from 80% of the trades. If one wants to spend less time in front of the computer, focusing on the 20% that are ideal seems the most efficient use of time!
Even with my criteria the 80/20 principle applies. 80% of my profits are made by 20% of my trades. Cutting losses quickly eliminates over 50% of the trades. Of the remaining forty some odd percent only a few will run hard and strong.
Definitely worth waiting for.
"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard