How to find a TSLA like explosive stock before its huge advance; more green line break-outs
I know all of us would like to identify a break-out stock like TSLA before it doubles. Did TSLA give itself away before its break-out? I believe the methods I have been demonstrating show how it would be possible to detect such an explosive move in advance. So, let’s do it.
First, I have been saying that to find a winner, one must look for stocks hitting new highs. So, we run a scan of stocks hitting new highs on the evening of April 1, 2013 and TSLA comes up. I immediately look at a monthly chart and find that TSLA is a green line break-out to an all-time high. I see that On April 1, 2013 TSLA closed at 43.93, well above its former peak price of 39.95 reached a year earlier in March, 2012. This current monthly chart shows where the green line might have been drawn on or before April 1, at its prior 2012 peak .
So the night of April 1, with TSLA at an all-time high, I would have immediately looked at its weekly chart. (This chart is as of the end of the week TSLA broke out.)
Note the volume spike at the bottom. The stock broke to an all-time high on the highest weekly volume ever. This might also be a cup and handle break-out. Now here is the daily chart at the close of April 1.
Note the gap above the green line top on huge daily volume. Not all green line break-outs work out. Sometimes they fail and/or retest the green line and then take off. If we had researched TSLA we may have decided it was worth at least a small purchase, given it is a recent IPO in a new growth industry–battery powered cars. One might buy a little and see if the stock continued its advance or wait for it to re-test the break-out.
It turns out that TSLA did re-test its break-put, giving one an opportunity to buy it at the successful re-test. The rest is history.
With TSLA now at 91.50, don’t say that the stock did not give us trade-able signs of this advance before it took off. We just must know what signs to look for and to heed them.
Given that we are in a strong up-trending market, we can still look for new explosive stocks like TSLA. We can be alerted to them by scanning the nightly new high list. Then we must check to see if it is a green line break-out to an all-time high on above average volume. Then we can research it and decide whether it is in a growth industry that may excite people. Is it an IPO? The fact that TSLA had come public in the recent past was a plus because most funds would probably not already own it. Finally, we can buy it or watch for a re-test of the break-out and determine a buy point with minimal risk. (If the stock closes back below the green line we can sell with a small loss.)
I try to do some of the work for you by reviewing the new high list and posting green line break-outs for you to research and track. One such recent break-out is LEA (weekly chart below), in the strong auto-parts sector. Other recent green line break-outs have occurred in: SAIA, EQT, SNDK, MOH, HCI, PCH, LOPE, TREX, MTN, USNA, DRQ, TSO, TRIP and WHR. They are worth checking out. I own a few of these. Most will not explode up like TSLA, but many may go on long advances like FLT below. Why are so many people averse to buying stocks that break from a multi-month base (green line top) to a new all-time high? In the stock market I do not want to buy “bargains.”
Meanwhile the GMI remains at 6 (of 6) and the markets remain in an up-trend.
Bought MTN green line break-out today
Here is the daily chart. I placed a sell stop at MTN <64, GTC. If it fails, it is a small loss. The stock broke a peak set in 2007. This is posted for educational purposes only.
KSU: yet another successful Judy’s pick!
My amazing stock buddy, Judy, has been talking to me for some time about KSU. I finally bought some on Tuesday when it appeared to break out of a cup and handle base (see daily chart below). Then after the close on Thursday, it was announced that KSU is being added to the S&P 500 Index. It should therefore rise today as S&P 500 Index funds scramble to add KSU to their portfolios. Another successful pick from Judy!
Stocks that have doubled; ARMH and EXP: green line break-outs
Want to find a stock that will double in a year? Look at stocks that have already doubled in the past year. The best predictor of future behavior in stocks and people is past behavior. This list of 15 stocks came up in my new high and good recent earnings scan and closed at least twice their price of 250 days ago. ARMH and EXP have recently had a green line break-out to an all-time high.
Stocks with good earnings hitting new highs ; TREX: green line break-out
Tuesday’s new high and good earnings scan results: (click on to enlarge)
Many of these companies have come up on this list repeatedly and are therefore hitting a series of new highs. This weekly chart shows that TREX recently broke out of a 13 year green line top to a new all-time high.
Trend remains up
Here are 18 of my new high, good fundamentals scan results:
Indexes remain in up-trends; LOPE breaks out
Here are the 11 of 28 stocks that came up in my new high and good fundamentals scan from Friday’s close. All of these stocks also appear in one of my lists of stocks mentioned by IBD as possibly strong stocks.
All of these stocks but 3 (SBRA, CREE and GMCR) are green line stocks, above their highest multi-month base and near all-time highs. LOPE broke out to an all-time high last week on above average volume after it beat earnings estimates.
The GMI remains at 6 (of 6) and on a buy signal since 2/28.
All indicators positive; LOPE and GWRE–green line break-outs
Here are 14 stocks (of 30) that came up in my new high and good fundamentals scan and had a blue flag, indicating that they appeared on one of my lists of IBD noted stocks.
As seen in their monthly charts, LOPE and GWRE are recent green line break-out stocks, to all-time highs.
TQQQ beats almost all individual stocks–yet again!
Since the GMI gave a buy signal on 2/28, the QQQ has advanced +8.4% the QLD +17.1% and the TQQQ +26.4%. The SPY has advanced +7.7%. If one had purchased the 3X leveraged Nasdaq 100 ETF, TQQQ, at the close on 2/28, one would have done better than all but 7 of the Nasdaq 100 stocks, and all but 11 of the S&P500 stocks. None of the Dow 30 stocks beat TQQQ. So again we see that in a consistent up-trend, buying and holding the leveraged 3X ETF, TQQQ,, was far better and easier than trying to find the rare individual stock that would out-perform it. Are we committed to making money, or to proving that we are smart enough to find the needle in the haystack?
Worden T2108=77%, indicator approaches extreme
While the trend remains up, I note that the T2108 is becoming extended. This weekly chart of T2108 shows that the market is approaching the area where this indicator tops out–but it can take a while. T2108 measures the percentage of NYSE stocks closing above their average price over the past 40 days. To me, T2108 represents a pendulum of the emotional state of the market, going from one extreme to the other.
Below is a list of 17 of the 30 stocks that came up in my new high and good recent earnings scan that also had a blue flag. A blue flag on the left means the stock appears in one of my lists of stocks that has been highlighted by IBD.
