Weekly Breakout Candidates, Waiting With Calm and Patience
Last edition of the Weekly breakout candidates was the fifth edition published three weeks ago. If we have since then not published any further edition this is simply because exceptional technical configurations are rare and it is good so.
We are screening the stock markets for a set of rarely met criteria that alltogether increase the odds for a specific security to launch itself into a major bull run and to provide investors with multiple returns on initial investment.
The virtual portfolio we have developed since launching our weekly breakout ideas and some additional recommendations to buy individual stocks is already comprised of 22 different stocks, and this is coming close to the limits of reasonable portfolio management. With the first position introduced on 4 August 2017 this portfolio has returned an average of of 37.5% per position in approximately two months, and this is essentially due to a very few super-winning positions.
We would like to come with more frequent recommendations for our readers but it is much healthier to focus on a limited number of portfolio components and hold them for the longer term. For the time being we can only envision a few previously identified candidates to enter into the portfolio should the conditions be met for an actionable entry, which could possibly take many more weeks before happening or could possibly never take place. From this standpoint we will never stress enough how important it is to avoid anticipating the signals. Let us therefore review these pending opportunities.
Review of Investment Ideas From Our Portfolio Waiting List
Unfortunately we came to realize that the platform we employ for screening the US stock markets frequently does not account for reverse price splits and this especially in case of small capitalization stocks and for that reason several previously proposed investment ideas had to be cancelled such as $CLRB, $FSNN and $PYDS.
Remaining stocks under surveillance are therefore:
AKORN, INC. – NASDAQ: $AKRX
- INSMED INC. – NASDAQ: $NTEC
- LITHIUM X ENERGY CORP. – $LIXXF
- MYOKARDIA INC. – NASDAQ: $MYOK
- NANO ONE MATERIALS CORP. – $NNOMF
AKORN, INC. – NASDAQ: AKRX
EDIT on 10 Dec 2017: The reason for AKORN stagnating below the $34 level is the consequence of an approved merger agreement with Fresenius Cabi. We remove AKORN from our list of breakout candidates.
Strategy as innitially proposed on 10 Sep 2017
– Buy the breakout when the price moves above $34 (highlighted green area).
– Place the stop-loss slightly below $30 (red line segment).
– Target previous price peak at ca. $57.
– Profit/Loss ratio: ca. 23/4 ~ 6:1.Original idea
The situation has not changed since then and we are still looking for a break above $34.
INSMED INC. – NASDAQ: INSM
Strategy as initially proposed on 18 Sep 201
– Buy the stock if and only if price sets back below $20, better below $18.
– Place the stop-loss just below the top of the last candle ($13.30) before the gap up at $13.29 as it should be expected for the gap to remain unfilled.
– Target a move back up to the red resistance line corresponding to the public offering price at $28.5 (and later on above it).
– Strategy should be reassessed if scenario becomes realized.
– Profit:risk ratio can not yet be defined.
We still would like to see the stock price coming down in the blue area for partially filling the gap up but with absolutely no certainty that this will happen.
Lithium X Energy Corp. – TSX-V: $LIX / OTCQB: $LIXXF
It was initially proposed on 13 Aug 2017 to watch for a decisive break above CAD 2.25, which did not yet happen. The stock price briefly went up to this level and rapidly retreated, not decisively breaking the level so no action was initiated. The CAD 2.25 level translates into a break above $1.9 in case of LIXXF that trades on the US stock market and which should be broken to buy this stock. The position of the stop loss will be defined in due time should this event happen.
Myokardia Inc. – NASDAQ: MYOK
We previously mentioned that Nano One Materials Corp. is set to double and still view this objective as extremely conservative. From today’s standpoint investors should be jumping with both feet if the price of NNOMF that trades on the US stock market was to come down below $0.8. When opening the position the initial stop loss level should be placed slightly below $0.6.