Since I just talked about this stock last night and it broke out today I figured I’d review some characteristics of winning stocks and what to look for to ensure you have proper risk/reward. Palm had everything going for it prior to today’s breakout and while today’s volume wasn’t by definition explosive, I’d say it was just the bare minimum required to assume higher prices are ahead as long as the entire market continues moving higher.
- Large volume move in early 2009 indicating institutional accumulation
- Nice 3 month base with lower volume down moves with higher volume up moves
- Reverse head & shoulder pattern suggesting new highs soon once it breaks out
When viewing this chart on a 12 day – 30 min chart you’ll more clearly see the base that was forming along with the breakout on high volume. After breaking out it quickly retested support and zoomed higher into the close. The only thing that would have been more perfect was a close at the highs. I entered today just at support and carry a 4% gain/cushion overnight.
While there still remains few leading high quality stocks out there, some stocks are breaking into uncharted territory such as SNDA, QSII, ALGT, NTES, HGG. These are the types of stocks you’ll want to focus on as this secular bull market continues moving higher.