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.

 

DAY 6: THE MARKET RUNS IN CYCLES – STAY IN STEP NATURALLY

Buying stocks as they break out from a watch list is the easy part.

I actaully consider it a science. It’s has to be as non-emotional of a decision as it gets.

One thing to keep in mind, even if you are working with a rather large amount of capital, you should make an attempt to keep the number of positions you own to a manageable amount.

Here are some basic guidelines.

CAPITAL	# OF POSITIONS	ALLOCATED FOR EACH POSITION
$ 1,000,000	12 – 15	$66,666.67 – $83,333.33
$    500,000	6 – 8	$62,500.00 – $83,333.33
$    250,000	5 – 6	$41,666.67 – $50,000.00
$    100,000	4 – 5	$20,000.00 – $25,000.00
$      50,000	3 – 4	$12,500.00 – $16,666.67
$      25,000	2 – 3	$8,333.33 – $12,500.00
$      10,000	1 – 2	$5,000.00 – $10,000.00

 

Once you bought several breakouts, and have built a portfolio of high-ranked leaders, you are of course going to have to manage your holdings.

You should continually be sorting your portfolio stocks, or ranking each from strongest to weakest.

Use the “3 Pillars of Analysis” to Grade Each Individual Holding

TECHNICALS – Daily price/volume action, trendlines, support and resistance.

FUNDAMENTALS – Earnings estimates/revisions, company news, and company events such as new management or resignations.

RANKS – EPS, RS, A/D, Group, etc.

Remember, the market basically runs in a perpetual cycle from bullish-to-bearish-to-bullish again.

So while the market is getting into gear with a another rally run, we have stocks to buy with new breakouts.

Then, when the market pulls in or corrects, there will of course not be any new breakouts showing up. This allows us to then turn our attention to our current holdings, and monitor them for sell signals.

We’re doing that by continuously sorting them a scale from strongest to weakest. We cut the weaker stocks first as the price/volume action deteriorates or each one technically violates support. This creates buying power in preparation for the next uptrend, and we can use that cash for fresh breakouts when they emerge.

Hold the stronger positions as they should be the first to continue higher when the rally resumes.

You are going to be buying your breakouts one-at-a-time. So, the stronger a rally the more you will become invested.

Use this method through several rally/correction cycles, and you are much more likely to get your doubles like our JAZZ (+104%), VIPS(+116%) and most recently our ULTA (+103%) to name a few.

Remember, it all starts with building a watch list…

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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 sixth breakout we had between July 11th – Aug 11th which occurred on Aug 3rd.

I will update the final breakout later this weekend.

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

Today, I briefly went over managing a portfolio of breakouts. (above)

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

#6 CDK Global, Inc. (CDK)

CDK Global, Inc. provides integrated information technology and digital marketing/advertising solutions to the automotive retail industry worldwide.

I added this Computer-Tech Services leader to the Technical SetUps WatchList on 8/1 as it was setting up in a base near all-time highs, and slightly above its 50-day moving average by just +3%.

As longer-term subscribers known, I consider this ideal from a technical perspective. When a stock is setting up in this fashion, there is very little overhead supply in the way of potential gains, while during a possible pullback, there is also sound support just below.

Shares broke out on 8/3 and triggered a BUY signal as the company announced Q2 results before the open which topped Street forecasts.

SYMBOL	LAST	ADDED TO WATCH LIST	BREAKOUT DATE	BREAKOUT PRICE
CDK	$57.66	08-01-16	08-03-16	$ 58.27

1st SUPPORT	2nd SUPPORT	MAX LOSS GUIDE	EARNINGS	CURRENT % GAIN/LOSS
50 DMA	$52.00	$53.60	8/3/16	-1.05%

Charts courtesy of StockCharts.com

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

 

The stock did close off of the morning highs that breakout day, yet remained above our TRIGGER PRICE of $58.26, as the volume came in at 2,114,600, which was +127% above the normal rate.

As we known with earnings breakouts there is always the chance of some continued volatility. However, trading action the following day was rather tame, ending with only a -1.3% loss as volume was about average.

There was a very quick dip in price on that Friday 8/5 to near exactly our 1st SUPPORT which is the 50-day moving average, at $56.44.

From there, this fresh breakout went on to close the day with a slight gain.

Currently, the stock’s ranks remain strong, and a break back above the previous highs near $59 would be significant.

On the downside, our 1st SUPPORT remains the 50-day moving average, currently at $56.86.

A significant close below there would be the final sell signal, as there is no further support until near $52.

Need help in building a watch list ?

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

Then take the first step and start receiving my morning watch list of high-ranked, fundamentally sound leaders which are setting up in bullish technical bases ?

Learn more here –> Stock WatchList Morning Update

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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