Reasons: 1. Low-risk entry point 2. Confirmed stage 2 uptrend 3. Has gone through a majority line of supply 4. A breakaway move, first breakout of a confirmed stage 2 uptrend 5. High relative strength 6. Volume dries up as less supply coming to the market
Flaws: 1. The market is still in a hard-penny environment, not much confirmation from the momentum stocks with only 25% of total stocks above the 200-day moving average 2. The index is moving higher but there are still less stocks setting up in this market
The stock breaks near the closing day and squats. I like to see if the stock can tighten up for one last contraction, resetting its pivot, before I consider adding more to my position.