You're tracking a stock that meets your fundamental criteria. It's building a sound base.
So far it appears to be shaping a cup with a potential buy point 10 cents above the high of the left side. But that could change if the stock suddenly reverses to instead form a double bottom, or it eases slightly to carve a handle.
How can you stay informed about the stock's action each day to avoid missing out on the actual buy point — and breakout that could follow
First, keep a close eye on daily and weekly stock charts so you know what buy point and action to look for at a breakout.
Next, use the tools IBD provides to help investors stay on their toes. The daily NYSE and Nasdaq Stocks On The Move tables (today on Page B7) show which issues are being bought heavily by institutional investors. Leading stocks with gains in big trading volume and Earnings Per Share and Relative Price Strength ratings of 80 or better are boldfaced and listed at the top.
Ideally you'd see the stock show up on these tables ahead of a potential breakout. In addition to the company name, ticker symbol, and price and volume action, they also list key fundamental ratings: Composite, Earnings Per Share, Relative Price Strength and Accumulation/Distribution.
The stocks' 52-week high is provided. This is useful because most buy points form at 5% to 10% below the former peak, which is usually the high of the left side. So if you notice a stock on your watch list getting closer to its 52-week high, it may be setting up for a breakout.
You can find Stocks On The Move on Investors.com too. The lists display leaders that are being heavily bought or sold by institutional investors. These lists update throughout the regular trading session. The table uses real-time prices from BATS U.S. Stock Exchanges.
Another useful tool: The daily Stock Market Today intraday updates at Investors.com highlights leading stocks that are breaking out or making big moves. The column also keeps readers updated on overall market action and relevant economic news.
Setting price alerts for your watch-list stocks is a good idea too. If you trigger an alert to go off when a stock crosses its ideal buy point, for instance, you may still get a chance to snap up shares before they become extended. Most brokers and financial websites offer free price alert services.