For Immediate Release
Chicago, IL – January 9, 2020 – Stocks in this week’s article are CNX Midstream Partners LP (CNXM - Free Report) , Akoustis Technologies (AKTS - Free Report) , CRH Medical (CRHM - Free Report) , Mesoblast (MESO - Free Report) and Photronics (PLAB - Free Report) .
5 Breakout Stocks for Explosive Returns
Picking breakout stocks is one of the most-favored methods for those utilizing an active investing approach since this strategy promises superlative returns. This method involves zeroing in on those stocks whose prices are varying within a narrow band.
If the price of the stock falls below this range, it could be the best time to sell it off. However, the best time to buy a stock as per this strategy is when it is about to break above this trading band. Such stocks offer the prospect of impressive gains.
Zeroing in on Breakout Stocks
In order to select the right breakout stock one has to first calculate its support and resistance level. A support level is the lower bound for stock movements while a resistance level refers to the maximum price which it trades within over a considerable period.
In other words, demand for a stock is at its lowest at its support level, which means most traders are willing to sell it. At the resistance level, most traders are willing to go long on the stock, which means that they would like to add them to their portfolio. The key to identifying breakout stocks is to zero in on those that are on the verge of a breakout or those that have just broken above the resistance level.
Has a Breakout Really Occurred?
The primary risk associated with such a strategy is that the decision to buy an apparent breakout candidate may be incorrectly timed. When a stock moves above the resistance level, it should be a highly prized commodity for traders. However, whether such a breakout is at all genuine is another matter altogether.
For a bona fide breakout, the stock’s earlier resistance barrier should become its new support level. This only happens if the trading channel that has been established is tested by observing long-term price trends. The strength of the support and resistance levels can be ascertained only through such a study. Despite the risk of misidentification, correctly identifying such stocks can yield considerable returns, even at a price which may not seem attractive at first glance.
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