Breakout Trading on Emerging and Strong Stocks

[almx]

Finally I couldn't resist entering GM today.

My entry is by far late, the only positive for now is that even being so late, my stop loss remain below the last resistance which is at the top of the last Darvas box at 46.17
From that level which should act now as support in case of retracement, I still have 3.2% margin before being stopped out and if the push remain strong the rest of the week maybe I will be luck and it won't retrace that much.

 

[deaddog]

Just wanted to record what I consider a perfect Darvas Setup.

I know I'm being picky but not quite perfect; It's not an all time high and not a leading industry.

 

[almx]

I know I'm being picky but not quite perfect; It's not an all time high and not a leading industry.

No problem, I always welcome and like constructive criticism, I prefer people that are perfectionist and win than the contrary.

Moreover I agree with you on both points and was fully aware of that before entering, I record in my journal the position of the Industry and the relative strength of the stock at the moment I enter and also from which screen I took the stock and which technical figure I traded.

In addition to that, if you take an higher perspective, for me it's in phase 2 so it should maintain its current trend until eventually a new all time high. All the other technical stuff was flashing a green light.

But who knows, it can also turn south tomorrow forcing me to learn to become as picky as you in the future

 

[almx]

Adding a new entry to my portfolio.

RPAY Broke up a symmetrical triangle with good volume after also a recent new 52 weeks high. I entered at 11.08 and it seemed to me a bit early to break that triangle but the volume was there so I think it should be okay.

EDIT: Trade canceled, I closed the position as the stock retraced back into consolidation.

 

[deaddog]

Adding a new entry to my portfolio.

Not sure which stocks you mentioned are in your portfolio.
Can you give us a list?

 

[almx]

Not sure which stocks you mentioned are in your portfolio.
Can you give us a list?

Those numbered in my previous posts plus GM

 

[deaddog]

Those numbered in my previous posts plus GM

I get 12 positions.
Did you skip over the part about diversifcation when reading Darvis and Minervini?

 

[almx]

I get 12 positions.
Did you skip over the part about diversifcation when reading Darvis and Minervini?

Yes, 12 is the right count.

You mean I'm not diversified enough ?
When entering my trades I was also looking at that but I must admit without giving it too much weight, in all I have :
1 Insurance (HG), 1 Retail (BROS), 1 Finance (FUTU), 1 Transport (CMRE), 1 Business Services (APG), 1 Internet (CARG), 1 Leisure (UBER), 1 Consumer (VIRC), 3 Software (PSN,CLSK,VRNS) and 1 Auto (GM) companies. I think it's quite well diversified, don't you think ?

But anyway, for now I solely focus on the trend, the relative strength and technical setup to enter, they all are my first buys using this system and need some feedback to see if that's enough for the selection or not.

And you, would you mind to share your list, or at least some of them ?
You seem well informed so I'm interested, I have 300+ stocks in my watch list, at least I could tell you if they are there... Tell me also about your selection process I'm also open to learn from other people.

 

[deaddog]

Yes, 12 is the right count.

You mean I'm not diversified enough ?

No, the authors you quoted are not big fans of diversification.
O'Niel suggests 7 to 8 stocks maximum.
Darvis says "Diversifying over a large number of stocks leads to only average performance. Since only 3 or 4 will produce big profits the remaining stocks drag the performance down."

And you, would you mind to share your list, or at least some of them ?
You seem well informed so I'm interested, I have 300+ stocks in my watch list, at least I could tell you if they are there... Tell me also about your selection process I'm also open to learn from other people.

Right at this moment I'm holding COST, MSFT & NVO
I also trade Canadian stocks. DOL, PEY, NA (NA had an ugly move this morning but still above my Jan entry. we'll see what happens)
My selection process is to scan for new highs. Add them to a watchlist and then make an arbitrary decision whether to speculate or not.
I also scan that watchlist for 3 to 5 day pullbacks for a quick swing trade.

 

[almx]

Ah understood, Darvas said even less but at the time he didn't had the tools we have today.

My problem with having less stocks is that in case of failure the loss is bigger as the position size is higher. I don't want to buy and hold for years just get the momentum and compound when I can. I also want to trade more different setups from different screens and industries until "I feel" what works best...

Another reason is that on some entries when too volatile or not fully confident, I enter half and use the other half for a different one of same type so I end with more stuff. Somehow I'm still refining my process but I don't expect to have more than 14-16 positions.

All strong stuff, the stocks you hold!