Fifteen breakouts beyond the 55-day price channel among the 600+ stocks and exchange traded funds I screened. Thirteen of them have strong trends.
Tumbling Europeans galore. It's like watching acrobatics by Cirque du Soleil.
I’ve tightened up a bit on the rising average directional index (adx) rule. Whereas before I would accept a miniscule one-day rise, I’m now looking for either a good angle of rise, or a series of low-angle rises that can be called a trend. Pretty much a judgment call.
I’m also disallowing whipsaw breakouts, where the price pierces the price-channel boundary, and then retreats to the other side of the day’s open, producing the possibility of a daily movement opposite the direction of the breakout. (For example, a bearish breakout on an up day would be disallowed; likewise, a bullish breakout on a down day.)
Just an observation: I’ve seen an unusual number of flat and declining adx lines in my recent scans.
This weekend’s project: A comparison of Joe Ross’ method of playing breakouts from congestion and the Turtle Trading methodology that I’ve been using this year on Private Trader. See my recent essay, The Trouble With Turtles. My goal is to use some of Ross' ideas to correct Turtle problems.
Strong-trend Breakouts
| sym | phase | adx | bday | blevel | stop | atr | atr% |
|---|---|---|---|---|---|---|---|
| ABB | sep9 | $18.48 | $19.31 | 0.84 | 4.6% | ||
| CSX | sep9 | $19.76 | $20.57 | 0.81 | 4.1% | ||
| DB | sep9 | $32.52 | $34.79 | 2.27 | 7.0% | ||
| DRI§ | sep9 | $43.60 | $45.18 | 1.58 | 3.6% | ||
| ECA | sep9 | $23.09 | $24.08 | 0.99 | 4.3% | ||
| EWG+ | sep9 | $18.26 | $19.11 | 0.85 | 4.7% | ||
| EZU+ | sep9 | $27.80 | $28.98 | 1.18 | 4.2% | ||
| FSLR | sep9 | $85.96 | $90.85 | 4.89 | 5.7% | ||
| FTE | sep9 | $16.71 | $17.32 | 0.61 | 3.7% | ||
| PHG | sep9 | $17.80 | $18.50 | 0.85 | 4.8% | ||
| SI | sep9 | $90.98 | $94.22 | 3.40 | 3.7% | ||
| TEF | sep9 | $18.48 | $19.23 | 0.75 | 4.1% | ||
| VCI | sep9 | $21.50 | $22.67 | 1.17 | 5.4% |
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 (*).
Weak-trend Breakouts
| sym | phase | adx | bday | blevel | stop | atr | atr% |
|---|---|---|---|---|---|---|---|
| EWP+ | sep9 | $31.67 | $31.97 | 1.35 | 4.3% | ||
| UUP+ | sep9 | $21.74 | $21.64 | 0.17 | 0.8% |
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.
The trader’s greatest sin is inaction. Sleeper, awake! Seize the Nietzchean moment. Roll out of bed and trade.
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