9/7 Top Prospects

Three breakouts beyond the 55-day price channel among the 600+ stocks and exchange traded funds I screened, all having strong trends.

There are many sharp pullbacks post-breakout back to within the 55-day Donchian price channel, i.e., profit-killing whipsaws. It's not unlike what we saw in August, when the crazy, fun-loving interns were in charge of the trading desks.

Honestly, I'm befuddled. I’m not sure how to play this kind of market, off of a daily chart, at least. The technical signals become absolutely useless. An intra-day chart, with its faster response time (although less profit potential), is a different matter, of course.

Strong-trend Breakouts

sym	phase	adx	bday	blevel	stop	atr	atr%
DRI§		25	sep7	$43.85	$45.51	1.66	3.8%
HFC		29	sep7	$36.20	$33.28	2.26	6.2%
URBN		34	sep7	$23.89	$25.24	1.35	5.7%

Exchange-traded funds are marked with a plus sign (+) after the ticker symbol. Stocks within 30 days of an earnings announcement are marked with a section symbol (§). My holdings are marked with an asterisk (*).

Key

• phase: Green for a bull-phase breakout, red for a bear phase.
• adx: Average direction index location, indicating the strength, or the temperature, of the trend. Orange for 40 or greater, aqua (light blue) for 25 and up but below 40, magenta (light purple) for 20 and up but below 25, and brown for anything below 20. (Mnemonic: Orange for the overhead sun, blue for the surrounding sky, magenta for sunset on the horizon and brown for the earth.)
• bday: Breakout day, the day the price broke through the upper or lower 55-day price line.
• blevel: Breakout level, the price level of the line that was broken through.
• bstop: The stop/loss price calculated on breakout days as the 14-day average true range below the breakout-day low for a bull phase and above thre breakout-day high for a bear phase.
• atr: The 14-day average true range, in the same currency as the price.
• atr%: The average true range as a percentage of the breakout level, an indicator of volatility that is comparable for all potential trades.

About channel analysis
Read a detailed explanation of my channel analysis method, including trading rules.

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