How To Buy The Best Breakout Stocks On A Pullback
Oct 27, 2013
Have you ever prepared to buy a momentum-driven breakout on a stock that formed a great chart pattern (such as a cup and handle), but for whatever reason you missed the entry point on the day the stock breaks out?
If you are like most swing traders (including ourselves), that has probably happened to you on numerous occasions.
Indeed, it can be frustrating to watch a stock on your watchlist rally sharply higher on the day of the breakout, without you in it.
But since breakout stocks usually pullback just a few days later, there is no need to panic.
Instead, patient and astute traders can profit from trading these breakouts by simply buying the first pullback.
3 Breakout Stocks We Traded On A Pullback
In September of 2013, we posted two videos that clearly explained our winning strategy for buying pullbacks of the best stock breakouts.
1.) On September 10, we walked you through our recent pullback entry into Yelp ($YELP), which we are still long in the model portfolio of our Wagner Daily newsletter.
Presently, the $YELP trade is showing an unrealized gain of 35.3% since our original buy entry point.
2.) Then, in this September 18 blog post, we detailed how we used the same trading strategy to buy LifeLock ($LOCK) on a pullback.
That momentum swing trade has since been closed for an average gain of approximately 17% (trade was closed with two separate exit points).
3.) Now, we bring you a third video that explains how we recently bought Mercadolibre ($MELI) on a pullback, a few days after the stock broke out from a chart pattern that was similar to a bullish cup and handle.
We’re still holding $MELI from our original buy entry and the trade is up just over 10% as of the October 25 close.
How We Bought $MELI On A Pullback
Click on the “play” button to view the 6-minute video below. For best viewing quality, click the square icon on bottom right side of the video player window to view in full-screen mode:
Compared to other breakout stocks we’ve recently bought (such as Silica – $SLCA), the price momentum in $MELI has not been overly impressive (so far), but we believe the video has high educational value regardless.
What do you think?
By the way, just to eliminate any possible confusion, the video above was actually uploaded to our YouTube channel back on September 30 (which is why the current price of $MELI is higher than shown in the video).
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