Do all breakouts deliver stunning returns? No.
But some breakouts do deliver extraordinary returns in 3-9 months time. Here’s one common thing they do that enables them to deliver stunning returns. Here are STAR breakouts of 2017 and they tell us something very important: the characteristics to look for before jumping breakout bandwagon.
1. Reliance Breakout
Breakout Date: Feb 22 2017
Opportunity Date: Feb 23 2017
Opportunity Price: 590
CMP: 920
Gains: 55%
Source: Chartalert.com
Reliance has been one of the most publicized breakouts of 2017. The stock is up 55% from the Opportunity Price.
2. IndiaBulls Real Estate Breakout
Breakout Date: April 17 2017
Opportunity Date: April 18 2017
Opportunity Price: 135
CMP: 219
Gains: 62%
Source: Chartalert.com
Indiabulls Real Estate stock broke out with a Large Candle. It was a huge move with no pullback and stock just continued with its upmove. It’s a great stock to understand why Large Candle Breakout is so important to pursue aggressively. It was part of Breakout in Real Estate stocks. The other two breakouts that happened with Indiabulls Real Estate: Brigade Enterprises and Godrej Properties
3. Godrej Properties
Breakout Date: March 17 2017
Opportunity Date: March 31 2017
Opportunity Price: 390
CMP: 710
Gains: 81%
4. Chambal Fertilizer Breakout
Breakout Date: January 06 2017
Opportunity Date: January 20 2017
Opportunity Price: 83
CMP: 145
Gains: 72%
Source: Chartalert.com
Chambal Fertilizer stock broke out with huge candle in January and then it consolidated for 3 months….yes patience if structure is right and then made a stunning move in following 3-4 months
5. Rain Ind Breakout
Breakout Date: January 18 2017
Opportunity Date: January 20 2017
Opportunity Price: 65
CMP: 371
Gains: 600%
Source: Chartalert.com
Rain Ind broke out with a Large candle and then it never looked back. The stock is already up 100%
6. Bharat Electronics Breakout
Breakout Date: December 02 2016
Opportunity Date: December 30 2016
Opportunity Price: 138
CMP: 178
Gains: 28%
Source: Chartalert.com
Bharat Electronics stock has been slow and steady mover in 2017 and stock is now up 28%.
7. TinPlate Breakout
Breakout Date: July 07 2017
Opportunity Date: July 14 2017
Opportunity Price: 118
CMP: 251
Gains: 120%
Source: Chartalert.com
TinPlate stock broke out with a large candle and pulled back for a week before resuming uptrend again.
8. Sterlite Tech
Breakout Date: January 24 2017
Opportunity Date: January 24 2017
Opportunity Price: 115
CMP: 240
Gains: 100%
Source: Chartalert.com
Sterlite Tech stock broke out with a large candle and then continued with small gains. It consolidated for weeks before then resuming uptrend again.
9. Tata Global Breakout
Breakout Date: August 18 2017
Opportunity Date: August 24 2017
Opportunity Price: 190-195
CMP: 285
Gains: 45%
Source: Chartalert.com
Tata Global stock broke out with a large candle, consolidated and then took off.
10. Future Consumer Breakout
Breakout Date: Feb 10 2017
Opportunity Date: Feb 17 2017
Opportunity Price: 27
CMP: 68
Gains: 151%
Source: Chartalert.com
Future Consumer stock broke out with a large candle and then the stock pulled back for a week but only to rally vertically in following weeks and months.
I covered most of the above breakouts Live as they happened. I know all breakouts do not succeed but even if you are right 60% of the time, it makes up more than for the stocks where things don’t work out as envisaged.
What makes some Breakout more successful than others?
1. Large Candle Breakout on Weekly Chart (Any minor pullback post that move is Strong Buy)
2. Volume on Breakout should be high (Stocks with Higher Liquidity tend to be more successful)
3. Patience is key as long as stocks don’t dip 5% below the breakout point.
4. Always have Stop Loss when things don’t go your way (Ready to fight another day)
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers