Learning to catch High Probability Breakouts

[amitrandive]

Further to the discussion of buying stocks at 52 Week high.

How about just blind buying stocks (a portfolio of say 20 stocks) breaking out to their 52 week highs. Keep a SL of say 5% and then trail. May be we could ignore fundamentals and just follow technicals. Keep a diversified portfolio. Get out of small caps but keep positions for long in high quality mid caps. This strategy is more suitable for small cap plays. SL is a must here. All trades are delivery trades. Is there any way to back test this. Please charts all have log scale so the rise is actually much more steep then it looks in the below charts. (We may have a good strategy in place if we can test this some way)

One needs to study this in detail before following it blindly.
Must be a way to backtest this in Amibroker.

An expert may help.

Some useful links

http://quantpedia.com/screener/Details/18
http://blog.alphaarchitect.com/2014/11/11/the-secret-to-momentum-is-the-52-week-high/
http://www.businessinsider.com/trac...s-trend-following-work-for-stocks-2011-7?IR=T

Some testing already done

http://www.asxmarketwatch.com/2011/...-can-you-still-profit-and-does-it-still-work/

 

[franz.kafka]

Is market cap the only criteria for investment ???

Is performance underrated ?

Not all equity investments are equal. That is certainly the case when it comes to investing in the shares of small, medium and large companies.

Investing in the shares of small companies offers a risk return profile vastly different to that of medium sized companies, and the largest of equities.

Any portfolio should have a balanced mixture of Small,Mid and Large cap stocks.

Any one is free to invest his money in whatever company he wants as per his risk.

My friend in your post only thing you mentioned was a chart stating it as a penny stock for being only 75 rs, if tomorrow IDFC splits and come down to 75 rs will it become penny stock.... Check the 2008 dec price of most of the stock, whole index was turned into pennies but it doesnt mean they became penny stocks......ashok leyland is no small company, check the facts......

Chereo

 

[Ankho Dekhi]

the Bearish Three Driver pattern is about to be completed in NF if it crosses 8662-68 level.

though it does not crosses it can be considered as a valid.

those who r interested in understanding wht is Three Driver pattern can visit the following page.

http://en.tradimo.com/learn/technical-analysis/chart-patterns/three-drives-reversal-chart-pattern/

The 1st target can be min 38.2% of total swing right from start to end.

:thumb:

 

[indianbank]

Its a good strategy, but problem is with exit . How will we plan our exit?

Normaly risk:reward 1:2 can be a good exit....

5% sl ................ profit 10% :thumb:

 

[jagankris]

JaganJi

I am not a fundamentalist ,so cannot make any heads or tails out of this.

Just my views

Fundamentals can be used to check the stock ability and strength.Technicals can give you the entry and exit.

Both have to be used with a fine balance.We cannot say that one method is superior over the other.

Dear Amit,

I am neither too a fundamentalist.
Bcoz I don't know FA.
(Know Just only the basic interpretation of data).

Share price fluctuates daily but fundamentals don't

But since the discussion went around 52 week high/Stock Manipulation/ FII holdings/FA etc

One year before
https://www.stockaxis.com/Research-Reports/Kitex-Garments-Ltd.aspx

I was wondering if the FA data actually justifies the price for the stock.
But if this is the kind of valuation - share prices do have then one can screen cheap but under priced FA stocks combined with TA to find potential multibaggers.

 

[newuser_RK]

Fa and ta generally don't comcurr. Fa search for low val ie stocks in downturn but ta looks for uptrends which are in richly valued stocks

 

[amitrandive]

Dear Amit,

I am neither too a fundamentalist.
Bcoz I don't know FA.
(Know Just only the basic interpretation of data).

Share price fluctuates daily but fundamentals don't

But since the discussion went around 52 week high/Stock Manipulation/ FII holdings/FA etc

One year before
https://www.stockaxis.com/Research-Reports/Kitex-Garments-Ltd.aspx

I was wondering if the FA data actually justifies the price for the stock.
But if this is the kind of valuation - share prices do have then one can screen cheap but under priced FA stocks combined with TA to find potential multibaggers.

Yes, Technicals and fundamentals can be combined together to catch good stocks.

Again the million dollar question is which parameters need to be applied from both the approaches and how to keep a track with so many stocks breaking out ?

This is difficult because for each Kitex Garment out there ,there are hundreds of such other non performing/manipulated stocks which can drain our money or keep it locked for long periods,even in largecap stocks.

Check the stock of NMDC , it has very good fundamental valuations,but as a trader/investor it's price has not gone anywhere for us to take profit from.

Monthly Chart of NMDC

 

[jain.er]

Keep track of NIIT Ltd. stock breaking out of 52W High

Another one giving a BO few days bay with a retest a bullish sign

Mind you non of these is a reco.

 

[amitrandive]

Potential Breakout Candidate

Aditya Birla Nuvo
BSE: 500303 | NSE: ABIRLANUVO | ISIN: INE069A01017 | SECTOR: TEXTILES - MANMADE

Current CMP:1070
Action:Buy
Stop Loss:1030
Probable Targets: 1160,1200
52 Week High:1291
52 Week Low:930.15

Reasons for trade:Above 20 day Moving average,Rising Volumes,Price forming Higher Low.

Patience and discipline are the keys to successful stock investing.If properly selected and held just see what wonderful returns can a stock give.

Current CMP of AdityaBirla Nuvo is 1948,

This is not a buy recommendation,only to illustrate that good stocks can be caught anytime with prudent analysis.

This post was made a year back on 29th March 2014

Weekly Chart of AdityaBirla Nuvo

 

[paappy]

Amitji,

Cummins Ind, in weekly chart, it has closed above it's recent range of 834-936, but it's volume is gradually decreasing.
Also the last candle is a shooting star. Is this a false breakout?
your views pls.

Regards,