From July 11th – Aug 11th we have had a total of 7 stocks break out from our daily Stock WatchList Morning Update.

That report is emailed out each market morning before the open. It contains my watch list of high-ranked, fundamentally sound stocks that are setting up in bullish technical bases of consolidation, and which looked poised to breakout.

For each stock in that watch list, I set specific “trading criteria”, including a TRIGGER PRICE. If a stock breaks out above its TRIGGER PRICE, I issue a BreakOut Alert to all subscribers via email. Stocks which trigger BreakOut Alerts are considered BUYs, and then are moved into the PORTFOLIO where each is monitored for SELL signals.

SEE: DAY 1 | DAY 2 | DAY 3 | DAY 4

DAY 5: USING RANKS TO GRADE YOUR STOCK

DAY 1 – You’ve built watch list of high-ranked leaders which were setting up in bases or in trends, and you properly bought stocks from that watch list as they traded above their TRIGGER PRICE with volume – check.

DAY 2 – Then, you updated the trading criteria for each stock that triggered – check.

DAY 3 – Now you are monitoring and noting each of their “Stock’s Vitals” and also how each position behaves if it nears chart support or resistance using price charts and basic technical analysis – check.

DAY 4 – You are performing your fundamental analysis by continuing to read the news headlines, stories, press releases for the companies you own while tracking earnings estimate revisions, and earnings release dates – check, check, and check.

Great.

The only other item to watch on a day-to-day basis is…

THE STOCK’S RANKS

Here are the ranks I use and follow. We can divide them into two types, fundamental ranks, and technical ranks.

Fundamental Ranks

EPS | Group RS | SMR | Sponsorship | Earnings Stability
(click each to study further)

Technical Ranks

Accumulation/Distribution | Relative Strength
(click each to study further)

You can get more proprietary IBD rankings here.

 

UPDATE: Every BreakOut We Have Had From the Stock WatchList Morning Update – 7/11 to 8/11

Below are the 7 stocks which broke out from my Technical SetUps WatchList, which is included in the Stock WatchList Morning Update, from 7/11 – 8/11.

If you bought any of these, or just want to learn more about how my investing system works, please do yourself a favor and take a few minutes to continue to read this concise yet informative and even educational report.

SYMBOL	LAST	ADDED TO WATCH LIST	BREAKOUT DATE	BREAKOUT PRICE	CURRENT % PROFIT/LOSS
YNDX	$22.48	08-03-16	08-11-16	$ 23.31	-3.56%
CDK	$57.66	08-01-16	08-03-16	$ 58.27	-1.05%
PCTY	$42.72	08-03-16	08-03-16	$ 45.99	-7.11%
CDW	$44.87	08-01-16	08-03-16	$ 43.22	+3.82%
BMCH	$20.11	07-20-16	07-25-16	$ 20.09	-0.10%
IEX	$93.87	07-20-16	07-20-16	$ 87.28	+7.55%
EBIX	$56.57	06-14-16	07-11-16	$ 50.03	+13.07%

 *prices and %P/L as of Friday’s (8/19) close.

Below is a detailed update of the fifth breakout we had between July 11th – Aug 11th which occurred on Aug 3rd.

I will update the remaining two breakouts later this weekend.

SEE: DAY 1 | DAY 2 | DAY 3 | DAY 4

 

Also included in these daily study lessons is a brief summary lesson from my 7-Day Comprehensive Study Course.

Today, I covered the ranks I use to grade a stock. (above)

Of course, I go into much more detail in my 7-Day Comprehensive Study Course here.

#5 Paylocity Holding Corporation (PCTY – Nasdaq)

Paylocity Holding Corporation provides cloud-based payroll and human capital management (HCM) software solutions for medium-sized organizations in the United States.

This high-ranked breakout is from the Computer Software-Enterprise group.

It was added to the Technical SetUps WatchList on Wednesday morning, and shares quickly broke out that same day as they traded above the TRIGGER PRICE of $45.99. Volume looked to be above average in the morning part of the session, yet came in at just slightly below the normal daily rate.

As I recently explained in my 7-Day Comprehensive Study Course – if you make a buy, and then volume does not come in at the preferred (+50%) above average rate, you do not sell before the close. Just treat it like a regular trade, just do note that lack of conviction on the breakout in your Profile Analysis.

SYMBOL	LAST	ADDED TO WATCH LIST	BREAKOUT DATE	BREAKOUT PRICE
PCTY	$ 42.72	08-03-16	08-03-16	$ 45.99

1st SUPPORT	2nd SUPPORT	MAX STOP LOSS GUIDE	EARNINGS	CURRENT % GAIN/LOSS
(was) $45.00	(was) 50 DMA	$42.31	08-09-16	-7.11%

Charts courtesy of StockCharts.com
Prices and %P/L as of Friday (8/19) close.

Shares did trade a bit higher on the following day after the breakout, although again with a continued lack of institutional interest.

Finally, on the 2nd day after the breakout we did see a bump in volume with an increase of +25% (not very much) as the stock closed at the session highs and at new all-time high.

As I noted then  – “…we can place our 1st SUPPORT at the highs of the previous base and near an upward trendline at $45. Below there we can use the 50-day moving average, currently at $42.23.” and “What is of utmost importance – management has scheduled a conference call to review its fourth quarter fiscal 2016 and full year fiscal 2016 results for this Tuesday at 5:00 pm ET.”

Earnings announcements are always the trickiest of times for an investor. There is no for-sure way of known how the stock is going to react to the release of the fundamental news. Nearly all of our stocks do well through earnings, even if they sell of on the news, they usually recover over the next several days or weeks.

Shares of PCTY did sell off on earnings that actually did come in below my guidelines. I am normally looking for companies to report a +25% increase in quarterly sales and earnings compared to the same quarter a year ago. Management did report sales of a +50% increase, yet earnings were -3 cent vs -1 cent for the same quarter last year.

As regular readers known, I judge stocks based on my “3 Pillars of Analysis” system. 1) Technicals, 2) Fundamentals, and 3) Ranks.

At that time, the stock had good technicals as it is trading in a nice uptrend which is not too steep while maintaining support offered by its 50-day moving average where it has been defended since it got back above there 3 months ago.

The ranks remained fairly high, yet now with the release of the latest earnings, the fundamentals were waning.

So, at this point your Profile Analysis (discussed in the workshop) for this trade should have at least two important negative entries…

8/3 – A breakout without volume conviction. (Technicals)
8/9 – Reported earnings below guidelines. (Fundamentals)

My notes at that time to members were – “Any considerable trading below the 50-day moving average, which is currently at $43.12, or a close below there would be the FINAL SELL SIGNAL.”

Shares fell below there on Wednesday and they also dropped out of the uptrend with a +198% increase in volume.

Here are the negatives to note that day on your Profile Analysis for PCTY.

Wednesday, August 17th

1. Sold off on volume (-6.15%/+198%)
2. Closed at the session lows.
3. Broke support of the 50 DMA and an upward trendline.
4. Price ($42.57) is now nearing the MAX LOSS GUIDE of $42.31.
5. There is no further support below here until the 200 DMA which is another -13%.

8/17 – POSITION CLOSED  -7.44%

Of course, not all trades are going to work out in your favor, and this one did not.

Never ignore what your Profile Analysis is telling you, and strive to keep your losses small or at the worst  -8%, while letting your winners run.

Save your Profile Analysis sheet for every trade you make in a binder and review those past trades (winners and losers) on occasion.

It’s not all about winning trades, it’s about developing a discipline, learning, and improving. A losing trade today may have cost you some capital, but if you use it properly to gain knownledge, that knownledge will pay off in the future many fold your initial loss.

You are not looking just to make money, but to build wealth.

Want to start receiving my morning watch list of high-ranked, fundamentally sound leaders which are setting up in bullish technical bases ?

Remember, this is where it all starts, with a watch list.

Then sign up today for my – Stock WatchList Morning Update – here.

If anyone needs any additional information, please let me known, as I would be glad to assist you.

Have Any Questions or Concerns ?

If you would like to schedule a phone appointment with me to answer any questions, address any concerns, or discuss the services I offer for self-directed investors, you can do so by using my appointment setter program here.

I talk to investors and traders on a regular basis, and I am always glad to help.

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