After a full month of consolidation, the markets are hitting all time highs:
This is a chart of the QQQ - the ETF for the Nasdaq 100 Index.
The market has seen a breakout above the near term trendline, and also put in a "3 white soldiers" candlestick pattern, indicating aggressive buying interest in the markets.
Simply put, the sellers had the chance to take control of the market, but there was no downside follow-through. That lack of follow-through tells us that the overall trend is still intact.
What I'm looking for headed into September are stocks that did not see large increases in volatility over the past month, but haven't yet broken out.
These trades I call "compression breakout" stocks.
Setup #1: ETFC
The stock filled its earnings gap around 39.50 and found aggressive buyers. The key level to watch is 41.30, the most recent pivot highs from the past two weeks. If the stock clears that, then the range highs will act as a magnet, and odds are we roll higher.
Setup #2: BIDU
After a massive move on earnings, the stock has gone sideways, with a few shakeouts here and there. Odds are this is the start of a new trend... here is what the weekly chart looks like:
It was a long term explosive move off a multi-year triangle pattern. I'm looking for ways to play this to the long side.
Setup #3: FSLR
Very similar to ETFC... sideways action, an earnings gap fill but the long term trend is still intact. A break and hold above 50 would confirm the trend change that happened just a few short months ago.
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