One of my favorite swing trade setups is the Earnings Breakout-Pullback Setup. It works in almost any market. The reason this setup is market proof is thatĀ earnings gives the stock a catalyst that often trumps what is going on in the market.
While there are many ways to trade earnings breakouts, this 5 step setup is easy to identify and profitable for swing and part time traders:
1) A stock that has formed a long base or range
2) A big gap breakout
3) A huge volume surge
4) A pullback to the bottom of the breakout bar for entry
5)Ā An exit near the top of the breakout bar.
Letās look at recent winning trade $ACCO. Ā Trade Report members were alerted of my entry as price hit the bottom of the breakout bar the day after the initial earnings breakout. Ā The stock traded within the range for a day before bouncing up to the bottom of the breakout bar. Ā This is a good place to exit as the first test of the top of the range oftenĀ leads to a pullback.
Now that you have have studied this example, keep track of stocks that breakout on earnings and track how the post breakout range develops. Ā In the report, we are now tracking 16 of these stocks since earnings season started two weeks ago. Ā Feel free to discuss your setups int he comments below.
Other articles in the breakout series:
Part 1: The breakout pullback setup
Part 2: The breakout-remount setup
Part 3: The breakaway gap setup
My focus list is, market analysis and trade alerts are all featured in theĀ Market Speculator Part-Time Swing Trade Report. Ā If you would like to receive theĀ swing trade report and alerts,Ā sign up for the free trial. Ā Follow me onĀ twitterĀ or email me at SinghJD1@aol.com
I work full time but love the market..get me started back on this journey to success I know is there waiting for me